Backpack Inc. reported the following actual and budgeted results for 2021. Actual Budgeted Backpack production 200,000 180,000 Backpacks sold 150,000 160,000 Selling price $20 $18 Direct materials per backpack 1.5 yards @ $2.00 Direct labor per backpack 0.5 hr. @ $14 Direct materials used in yards 290,000 Direct material costs $507,500 Direct manufacturing hours used 140,000 Direct labor costs $1,820,000 Required: Calculate the direct materials price and efficiency variances. Calculate the direct labor price and efficiency variances.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Problem 1
Backpack Inc. reported the following actual and budgeted results for 2021.
Actual Budgeted
Backpack production 200,000 180,000
Backpacks sold 150,000 160,000
Selling price $20 $18
Direct materials per backpack 1.5 yards @ $2.00
Direct labor per backpack 0.5 hr. @ $14
Direct materials used in yards 290,000
Direct material costs $507,500
Direct manufacturing hours used 140,000
Direct labor costs $1,820,000
Required:
- Calculate the direct materials price and efficiency variances.
- Calculate the direct labor price and efficiency variances.
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