## Description

Nola Company manufactured and sold 10,000 units last year for $175 per

unit, although it had budgeted to sell 12,000 units for $180 per unit. Nola

purchased and used 20,000 feet of direct materials for $400,000. Nola paid direct

labor $300,000 for 15,000 hours. Manufacturing overhead cost $650,000, half

variable and half fixed. Variable overhead is usually applied at

rate of 100% of direct labor costs. Fixed overhead was budgeted to cost

$400,000. Production standards call for each unit to use 2.5 feet of materials

costing $18.oo/foot, and 2 hours of labor costing $18.oo/hour.

Calculate all nine variances and indicate whether they are favorable or

unfavorable.

unit, although it had budgeted to sell 12,000 units for $180 per unit. Nola

purchased and used 20,000 feet of direct materials for $400,000. Nola paid direct

labor $300,000 for 15,000 hours. Manufacturing overhead cost $650,000, half

variable and half fixed. Variable overhead is usually applied at

rate of 100% of direct labor costs. Fixed overhead was budgeted to cost

$400,000. Production standards call for each unit to use 2.5 feet of materials

costing $18.oo/foot, and 2 hours of labor costing $18.oo/hour.

Calculate all nine variances and indicate whether they are favorable or

unfavorable.

SHOW YOUR WORK IN A TABLE THAT CONTAINS (Feel free to use Excel if you

wish)

Rows: REVENUE, DM, DL, VOH, CM, FC

Columns: Static Budget, Flexible Budget, Standard Cost of Actual

Quantity, Actual

Calculating All nine Variances include:

Sales Price Variance

DM Efficiency Var

DM Price Var

DL Efficiency Var

DL Price Var

VOH Efficiency Var

VOH Spending Var

CM Sales Variance

VOH Spending Variance

Show your work and the answers should be

Sales Price Variance 50000 U

CM Sales Vol Var 126000 U

DM Efficiency Var 90000 F

DL Efficeincy Var 90000 F

VOH Efficeincy Var 60000 F

DM Price Var 40000 U

DL Price Var 30000 U

VOH Spending Var 25000 U

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