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Master versus Flexible Budget, Saldahna Sports

1. An organization plans to make a product in batches of 25,000 units. Planned production is 1,000,000 units, and actual production is 1,125,000 units. What are the planned (master budget) number of batches and the flexible budget number of batches?

2. The Sudbury, South Carolina plant of Saldahna Sports Company has the following standards for its soccer ball production:

Material (leather) per soccer ball 0.25 yard
Material price per yard $16
Direct labor hours per soccer ball 0.20 hour
Wage rate per direct labor hour $10 per hour
Variable support cost rate $15 per direct labor hour

Actual results for October:
Used 13,000 yards of raw material, purchased for $205,150
Paid for 8,240 direct labor hours at $9.50 per hour
Incurred $131,840 of variable support costs
Manufactured 40,000 soccer balls

Determine the following variances for October
a. total direct material cost variance
b. total direct labor cost variance
c. total variable support cost variance
d. direct material price variance
e. direct material quantity variance
f. direct labor rate variance
g. direct labor efficency variance
h. variable support rate variance
i. variable support efficiency variance

Solution Preview

Problem #1
Planned (master budget) was for 1,000,000 units in batches of 25,000 units. So, number of batches is 1,000,000/25,000=40 batches.
Flexible number of batches=actual production units/25,000 units per batch=1,125,000/25,000=45 batches

Problem #2
a. Total direct material cost variance=Actual-Budget
Actual=given as $205,150
Budget=$4 per ball * 40,000 soccer balls=$160,000
Variance= $45,150

b. Total direct labor cost ...

Solution Summary

The problem deals with the master and flexible budgets of Saldahna Sports adn calculates the total direct material cost variance, total direct labor cost variance, variable support cost variance, and other manufacturing variances.