Zippo manufactures plastic outdoor chairs. The controller put together the following static budget and actual income statements
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Question:
Zippo manufactures plastic outdoor chairs. The controller put together the following static budget and actual income statements and the following additional information.
Actual | Static Budget | |
Revenue | 715,000 | 600,000 |
Direct materials | 287,375 | 250,000 |
Direct manufacturing labor | 250,250 | 150,000 |
Variable overhead | 96,250 | 50,000 |
Fixed overhead | 90,000 | 100,000 |
Operating income | (8,875) | 50,000 |
Budget Information
- Zippo expects to sell 50,000 chairs during the year
- Each chair is budgeted to use 10 pounds of plastic and take 1/2 hour to manufacture
- Variable and fixed overhead are allocated based on direct manufacturing labor hours
Actual Performance
- Zippo sells 55,000 chairs during the year
- Each chair used 9.5 pounds of plastic and 0.7 hour to manufacture
Chapter 7 Questions
- Prepare a flexible budget
- What are the level 1 variances?
Related Book For
Personal Finance An Integrated Planning Approach
ISBN: 978-0136063032
8th edition
Authors: Ralph R Frasca
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