Golden Food Products produces special- formula pet food. The company carries no inventories. The master budget calls for the company to manufacture and sell 132,000 cases at a budgeted price of $72 per case this year. The standard direct cost sheet for one case of pet food follows: Direct materials (3 pounds @ $2) $6 Direct labor (0.25 hours @ $32) 8 Variable overhead is applied based on direct labor-hours. The variable overhead rate is $40 per direct labor-hour. The fixed overhead rate (at the master budget level of activity) is $18 per unit. All nonmanufacturing costs are fixed and are budgeted at $2.8 million for the coming year. At the end of the year, the costs analyst reported that the sales activity variance for the year was $384,000 favorable.

Golden Food Products produces special- formula pet food. The company carries no inventories. The master budget calls for the company to manufacture and sell 132,000 cases at a budgeted price of $72 per case this year. The standard direct cost sheet for one case of pet food follows: Direct materials (3 pounds @ $2) $6 Direct labor (0.25 hours @ $32) 8 Variable overhead is applied based on direct labor-hours. The variable overhead rate is $40 per direct labor-hour. The fixed overhead rate (at the master budget level of activity) is $18 per unit. All nonmanufacturing costs are fixed and are budgeted at $2.8 million for the coming year. At the end of the year, the costs analyst reported that the sales activity variance for the year was $384,000 favorable.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter8: Budgeting

Section: Chapter Questions

Problem 4CMA: Krouse Company produces two products, forged putter heads and laminated putter heads, which are sold...

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