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Paynesville Corporation - Flexible Budget - 20 Feb, 2020

Flexible Budget (LO 16-2) Paynesville Corporation manufactures and sells a preservative used in food and drug manufacturing. The company carries no inventories. The master budget calls for the company to manufacture and sell 106,000 liters at a budgeted price of $120 per liter this year. The standard direct cost sheet for one liter of the preservative follows.

Direct materials (2 pounds @ $7) $14

Direct labor (0.5 hours @ $30)  15

Variable overhead is applied based on direct labor hours. The variable overhead rate is $50 per direct-labor hour. The fixed overhead rate (at the master budget level of activity) is $25 per unit. All non-manufacturing costs are fixed and are budgeted at $1.5 million for the coming year. At the end of the year, the costs analyst reported that the sales activity variance for the year was $396,000 unfavorable.

Required Prepare a flexible budget for Paynesville for the year.



Category : Management Accounting

Search Keywords :
Paynesville , Flexible , Budget , Sales , Activity , Variance , Preservative 


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Answer  - 20 Feb, 2020
Please see the excel attachment....


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