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  • Labor Direct Materials: Static-Budget Variance

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    Code Hook
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    The document presents budgeted and actual figures for units sold, selling price, revenues, variable costs including labor and direct materials, contribution margin, fixed costs, and operating income. It calculates variances between the static budget and actuals, and introduces two flexible budgets that adjust the static budget for actual sales volume or sales volume and selling price. Key variances are identified including sales volume, selling price, fixed costs, price, efficiency, and total variances.

    Original Description:

    Variance

    Original Title

    Variance Analysis

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    The document presents budgeted and actual figures for units sold, selling price, revenues, variable costs including labor and direct materials, contribution margin, fixed costs, and operating income. It calculates variances between the static budget and actuals, and introduces two flexible budgets that adjust the static budget for actual sales volume or sales volume and selling price. Key variances are identified including sales volume, selling price, fixed costs, price, efficiency, and total variances.

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    © All Rights Reserved
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    20 views6 pages

    Labor Direct Materials: Static-Budget Variance

    Uploaded by

    Code Hook
    The document presents budgeted and actual figures for units sold, selling price, revenues, variable costs including labor and direct materials, contribution margin, fixed costs, and operating income. It calculates variances between the static budget and actuals, and introduces two flexible budgets that adjust the static budget for actual sales volume or sales volume and selling price. Key variances are identified including sales volume, selling price, fixed costs, price, efficiency, and total variances.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 6

    Units sold

    Selling price
    Total revenues
    Variable costs
    Labor
    Direct materials
    Contributing margin
    Fixed costs
    Operating income

    StaticStatic Budget budget


    variance
    1,000
    10
    10,000
    -2,800
    5,000
    -800
    5,000
    -2,000
    3,000
    -200
    2,000 -1,800

    Actual
    800
    9
    7,200
    4,200
    3,000
    2,800
    200

    Sales
    Static Budget volume Flexible budget 1
    variance
    Units sold
    1,000
    800
    Selling price
    10
    9
    Total revenues
    10,000
    -2,000
    8,000
    Variable costs
    5,000
    -1,000
    4,000
    Labor
    Direct materials
    Contributing margin
    5,000
    -1,000
    4,000
    Fixed costs
    3,000
    0
    3,000
    Operating income
    2,000 -1,000
    1,000
    Keep all budgeted values except volume (adjusted to actual value)
    Or
    -1,000
    Assume FC constant
    Total static budget variance = 1,000 + 80

    Units sold
    Selling price
    Total revenues
    Variable costs
    Labor
    Direct materials
    Contributing margin
    Fixed costs
    Operating income

    Sales
    Static Budget volume Flexible budget 1
    variance
    1,000
    800
    10
    9
    10,000
    -2,000
    8,000
    5,000
    -1,000
    4,000
    2,500
    -500
    2,000
    2,500
    -500
    2,000
    5,000
    4,000
    3,000
    0
    3,000
    2,000 -1,000
    1,000

    Materials and labor


    Variable costs
    Labor hours
    Labor cost/hour
    Material units
    Cost per unit of material

    Budget

    Actual
    100
    25
    50
    50
    5,000

    75
    32
    40
    45
    4,200

    Flexible
    budget Actual amounts
    variance
    800
    9
    -800
    7,200
    200
    4,200
    -1,000
    3,000
    -200
    2,800
    -800
    200
    Or
    -800

    riance = 1,000 + 80
    Efficiency
    Price
    Flexible budget 2
    Actual amounts
    variance
    variance

    0
    -125
    -125
    0
    0
    125

    800
    9
    8,000
    3,875
    1,875
    2,000
    4,125
    3,000
    1,125

    -800
    325
    525
    -200
    -200
    -925

    800
    9
    7,200
    4,200
    2,400
    1,800
    3,000
    2,800
    200

    800 U

    Flexible bud

    800 U

    Selling pric

    200 F

    Fixed cost

    925 U

    Price variance

    200 F

    DM Price variance
    DM varianc

    525 U

    Labor price variance


    Labor varian

    1,800 U
    Total variance
    (static-budget variance)
    Flexible budget variance

    Sales volume variance

    Selling price variance


    Fixed costs variance

    Price variance

    Efficiency variance

    DM Price variance
    DM efficiency variance
    DM variance = 200 F

    125 F

    abor price variance


    Labor efficiency variance 125 F
    Labor variance = 400 U

    1,000 U

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