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In 2017, Roller Bag experienced a drop in sales due to increased competition for rolling suitcases. Roller Bag used 310,000 machine-hours to produce the 120,000 suitcases it sold in 2017. Actual variable overhead costs were $488,000 and actual fixed overhead costs were $532,400. The average selling price of the suitcases sold in 2017 was $72.
Actual direct materials and direct labor costs were the same as
- A. Calculate the variable overhead and fixed overhead variances (spending, efficiency, spending, and volume).
Required
- B. Create a chart like that in Figure 7-2 showing Flexible
Budget Variances and Sales-Volume Variances for revenues, costs, contribution margin, and operating income. - C. Calculate the operating income based on budgeted profit per suitcase.
- D. Reconcile the budgeted operating income from requirement 3 to the actual operating income from your chart in requirement 2.
- E. Calculate the operating income volume variance and show how the sales-volume variance is composed of the production-volume variance and the operating income volume variance.
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Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
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