Accounting Analysis

Jul 20th, 2016
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University of Phoenix
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Problem One: Preston Problem Two: AllTalk Technologies Problem Three: Java manufacturers coffee mugs that it sells to other companies for customizing with their own logos.

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Sales (1,000 recliners X $495)(980 recliners X $475)Variable manufacturing costs:Direct materials (6,000 yds @ $8.80/yard)(6,150 yds @ $8.60/yard)Direct labor (10,000 hrs @ $9.20/hour)(9,600 hrs @ $9.30/hour)Variable overhead (6,000 yds @ $5.00/yard)(6,510 yds @ $6.40/yard)Fixed manufacturing costs:Fixed overheadTotal cost of goods soldGross profit1000980Static Budget(1,000 recliners)495$495,00047560006143100009600600061438.88.69.29.45.26.652,80092,00031,20060,600$236,600$258,400Requirements:1. Prepare a flexible budget based on the actual number of recliners sold.2. Compute the price variance and the efficiency variance for direct materials and for direct labor. For manufacturing overvariable overhead efficiency, fixed overhead spending, and fixed overhead volume variances.3. Have Preston's managers done a good job or a poor job controlling materials, labor, and overhead costs? Why?4. Describe how Preston's managers can benefit from the standard costing system.Part A)Flexible Budget:By UnitFlexible Budget980Sales (980*495)495485,10052.8051,7449290,16031.2030,576Variable manufacturing costs:Direct materials (6,150*8.80)Direct labor (9,600*9.20)Variable overhead (6,510*5)Fixed manufacturing costs:Fixed overheadTotal cost of goods soldGross Profit_______________60,600233,080$252,020Part B)Material Price Variance = 6,150*(8.60 - 8.80) =Material Efficiency Variance = 8.80*(6,150 6,000/1,

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