Reference no: EM132596406
BRK Co operates an absorption costing system and sells three products, B, R and K which are substitutes for each other. The following standard selling price and cost data relate to these three products:
Product Selling price per unit Direct material per unit Direct labour per unit
B $14·00 3·00 kg at $1·80 per kg 0·5 hrs at $6·50 per hour
R $15·00 1·25 kg at $3·28 per kg 0·8 hrs at $6·50 per hour
K $18·00 1·94 kg at $2·50 per kg 0·7 hrs at $6·50 per hour
Budgeted fixed production overhead for the last period was $81,000. This was absorbed on a machine hour basis.
The standard machine hours for each product and the budgeted levels of production and sales for each product for the last period are as follows:
Product B R K
Standard machine hours per unit 0·3 hrs 0·6 hrs 0·8 hrs
Budgeted production and sales (units) 10,000 13,000 9,000
Actual volumes and selling prices for the three products in the last period were as follows:
Product B R K
Actual selling price per unit $14·50 $15·50 $19·00
Actual production and sales (units) 9,500 13,500 8,500
Problem 1: Calculate the total sales price variance for the last period.
Option 1: $20,000 (A)
Option 2: $20,000 (F)
Option 3: $15,875 (A)
Option 4: $15,875 (F)
Problem 2: Calculate the total mix profit variance for the last period.
Option 1: $3,000 (A)
Option 2: $3,000 (F)
Option 3: $1,062 (A)
Option 4: $1,062 (F)
Problem 3: Calculate the total quantity profit variance for the last period.
Option 1: $1,938 (A)
Option 2: $1,938 (F)
Option 3: $17,000 (A)
Option 4: $18,938 (A)