Question

# Based on a predicted level of production and sales of 15,000 units, a company anticipates total...

Based on a predicted level of production and sales of 15,000 units, a company anticipates total variable costs of \$48,000, fixed costs of \$21,000, and operating income of \$81,600. Based on this information, the budgeted amount of operating income for 12,000 units would be:

Multiple Choice

\$61,080.

\$82,080.

\$13,080.

\$38,400.

\$120,480.

Fletcher Company collected the following data regarding production of one of its products. Compute the variable overhead spending variance.

 Direct labor standard (3.00 hrs. @ \$18.20/hr.) \$ 54.60 per finished unit Actual direct labor hours 86,900 hrs. Budgeted units 29,500 units Actual finished units produced 28,500 units Standard variable OH rate (2.50 hrs. @ \$12.80/hr.) \$ 32.00 per finished unit Standard fixed OH rate (\$236,000/29,500 units) \$ 8.00 per unit Actual cost of variable overhead costs incurred \$ 910,400 Actual cost of fixed overhead costs incurred \$ 237,400

Multiple Choice

\$201,920 favorable.

\$2,500 favorable.

\$2,500 unfavorable.

\$200,320 unfavorable.

\$200,320 favorable.

Sales = Variable costs + Fixed costs + Operating income

= \$48,000 + \$21,000 + \$81,600

= \$150,600

Selling price per unit = \$150,600 / 15,000 units

= \$10.04

Variable costs per unit = \$48,000 / 15,000 units

= \$3.2

Operating income = Sales - Variable costs - Fixed costs

= (12,000 * \$10.04) - (12,000 * \$3.2) - \$21,000

= \$120,480 - \$38,400 - \$21,000

= \$61,080

----------------------------------------------------------------

= \$910,400 - (86,900 * \$12.8)

= \$910,400 - \$1,112,320

= \$201,920

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