Cost Accounting

Peaceful Corporation manufactures figurines based on the following information.

Standard costs	$20
Materials (4 ounces at $5)	$8
Direct labor (1 hour per unit)	$4
Variable overhead (based on direct labor hours)
Fixed overhead budget		$19,000
Actual results and costs
Materials purchased
Units	9,000
Cost	$39,600
Materials used in production
Finished product units	2,000
Raw material (ounces)	8,200
Direct labor hours	2,000
Direct labor cost	$20,000
Variable overhead costs	$5,980
Fixed overhead costs	$19,500

Required:

Prepare a performance report for Peaceful using the following headings.
1. Actual Production Costs
2. Flexible Budget Costs
3. Flexible Budget Variances
Compute the following variances (show calculations).
1. Materials usage variance
2. Labor rate variance
3. Labor efficiency variance
4. Variable overhead spending variance
5. Variable overhead efficiency variance
6. Fixed overhead budget variance
Give one possible explanation for each of the six variances computed in part b.

The following is the current variable costing income statement for Dolly Corporation.

Sales (5,000 units)		$100,000
Variable expenses Cost of goods sold	$35,000
Selling (10% of sales)	$10,000	$45,000
Contribution margin		$55,000
Fixed expenses
Manufacturing overhead	$24,000
Administrative	$12,500	$36,500
Operating income		$18,500

Below is the following information on operations for Dolly Corporation.

Required:

Prepare an absorption costing income statement.

The following information was compiled for two models of cell phones.

	3G model	4G model	Average
Budgeted Contribution Margin	$80.00	$120.00	$95.25
Budgeted Sales in Units	28,000	18,000
Actual Sales in Units	28,600	16,500

Required:

Calculate the sales mix variance. (Show your calculations.)