Problem 1

1.

Absorption Variable
Direct Materials 12 12
Direct Labor 10 10
Variable Overhead 8 8
Fixed Overhead 6 -
Product Cost Per unit 36 30

2.

Absorption Variable
Sales (900x50) 45,000 45,000
Variable COGS (900x30) (27,000) (27,000)
Fixed Overhead
(900x6) (5,400)
(1,000x6) (6,000)
Variable Expense (900x5) (4,500) (4,500)
Fixed Expense (900x3) (2,700) (2,700)
Profit (loss) 5,400 4,800

3.

Production 1,000
Less: Sales (900)
Change in Inventory 100
X Standard Fixed Overhead Rate 6
Change in Profit 600

Problem 2

1.

Materials Labor Variable OH Fixed OH

Actual Cost 13,050 23,306 15,718 12,000
Standard Cost 13,200 22,000 16,500 11,000
Variances (150) F 1,306 UF (782) F 1,000 UF
2.

Absorption Variable
Sales (950x80) 76,000 76,000
COGS, at standard
(950x57) 54,150
(950x47) 44,650
Add(deduct) cost variances:
Material variances (150) (150)
Labor Variances 1306 1306
Variable OH Variance (782) (782)
Fixed OH spending Variance 1000
COGS, Actual 55,524 45,024
Gross Profit/ Manufacturing Margin 20,476 30,976
Less: Variable Expenses (5,700) (5,700)
Contribution Margin 25,276
Less: Fixed Factory Overhead (12,000)
Fixed Expenses (8,000) (8,000)
Profit 6,776 5,276

3.

Production 1,100
Less: Sales (950)
Change in Inventory 150
X Standard Fixed Overhead Rate 10
Change in Profit 1,500

Problem 3.

1.

Absorption Variable
Direct Materials (25,200/1120) 22.5 22.5
Direct Labor (18,480/1120) 16.5 16.5
Variable Overhead (8,400/1,120) 7.5 7.5
Fixed Overhead (10,640/1,120) 9.5 -
Product Cost Per unit 56 46.5

2.

Materials Labor Variable OH Fixed OH

Actual Cost 23,400 17,160 7,800 10,000
Standard Cost 25,200 18,480 8,400 10,640
Variances (1800) F (1,320) F (600) F (640) F
 Materials Labor Variable OH Fixed OH Fixed OH VV
Absorption (1800) F (1,320) F (600) F (640) F 760
Variable (1800) F (1,320) F (600) F - -
Net Variances 0 0 0 (640) F 760 UF

3.

Absorption Variable
Sales (950x80) 76,000 76,000
COGS, at standard
(950x57) 54,150
(950x47) 44,650
Add(deduct) cost variances:
Material variances (150) (150)
Labor Variances 1306 1306
Variable OH Variance (782) (782)
Fixed OH spending Variance 1000
COGS, Actual 55,524 45,024
Gross Profit/ Manufacturing Margin 20,476 30,976
Less: Variable Expenses (5,700) (5,700)
Contribution Margin 25,276
Less: Fixed Factory Overhead (12,000)
Fixed Expenses (8,000) (8,000)
Profit 6,776 5,276