Sunset Hills Company makes customized golf shirts for sale to golf courses. Each shirt requires 1.5...
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Sunset Hills Company makes customized golf shirts for sale to golf courses. Each shirt requires 1.5 hours to produce because of the customized logo for each golf course. Sunset Hills uses direct labor-hours to allocate the overhead cost to production. Fixed overhead costs, including rent, depreciation, supervisory salaries, and other production expenses, are budgeted at $15,300 per month. The facility currently used is large enough to produce 1,700 shirts per month. During March, Sunset Hills produced 760 shirts and actual fixed costs were $10,500. Read the requirements. over which Sunset Hills has no control. C. For most products, demand varies from month to month. If Sunset Hills wants to meet demand in high demand months, the company will have excess capacity in low demand months. Having some access capacity would allow Sunset Hills to produce enough to cover peak demand as well as slack to deal with unexpected demand surges in non-peak months. D. Basic economics provides a demand curve that shows a tradeoff between price charged and quantity demanded. Potentially, Sunset Hills could have lower net revenue if it produces at capacity and sells at a lower price than if it sells at a higher price at some level below capacity. Requirement 4. Grand Slam's budgeted variable cost per unit is $26, and it expects to sell its shirts for $55 apiece. Compute the sales-volume variance and reconcile it with the production-volume variance calculated in requirement 2. What does each concept measure? Begin by calculating the static-budget operating income for March. Revenues Variable costs Fixed overhead costs Static-budget operating income Sunset Hills Company makes customized golf shirts for sale to golf courses. Each shirt requires 1.5 hours to produce because of the customized logo for each golf course. Sunset Hills uses direct labor-hours to allocate the overhead cost to production. Fixed overhead costs, including rent, depreciation, supervisory salaries, and other production expenses, are budgeted at $15,300 per month. The facility currently used is large enough to produce 1,700 shirts per month. During March, Sunset Hills produced 760 shirts and actual fixed costs were $10,500. Read the requirements. over which Sunset Hills has no control. C. For most products, demand varies from month to month. If Sunset Hills wants to meet demand in high demand months, the company will have excess capacity in low demand months. Having some access capacity would allow Sunset Hills to produce enough to cover peak demand as well as slack to deal with unexpected demand surges in non-peak months. D. Basic economics provides a demand curve that shows a tradeoff between price charged and quantity demanded. Potentially, Sunset Hills could have lower net revenue if it produces at capacity and sells at a lower price than if it sells at a higher price at some level below capacity. Requirement 4. Grand Slam's budgeted variable cost per unit is $26, and it expects to sell its shirts for $55 apiece. Compute the sales-volume variance and reconcile it with the production-volume variance calculated in requirement 2. What does each concept measure? Begin by calculating the static-budget operating income for March. Revenues Variable costs Fixed overhead costs Static-budget operating income
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To calculate the salesvolume variance and reconcile it with the productionvolume variance we need to calculate the staticbudget operating income for M... View the full answer
Related Book For
Horngrens Cost Accounting A Managerial Emphasis
ISBN: 978-0134475585
16th edition
Authors: Srikant M. Datar, Madhav V. Rajan
Posted Date:
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