Problem 1: Hunt, Inc., uses a standard cost system when accounting for its sole product. Planned production is 60,000 process hours per month, which gives rise to the following per-unit standards:
Variable overhead: 13 hours at $15 per hour
Fixed overhead: 13 hours at $7 per hour
During September, 5,100 units were produced and the company incurred the following overhead costs: variable, $942,500; fixed, $429,000. Actual process hours totaled 65,000.
Required:
(A.) Calculate the spending and efficiency variances for variable overhead.
(B.) Calculate the budget and volume variances for fixed overhead.
Problem 2: Fog City Retail operates a retail store in Phoenix, Las Vegas, and Portland. The following information relates to the Phoenix facility:
• The store sold 65,000 units at $18.00 each, a having purchased the units from various suppliers for $12.50. Phoenix salespeople are paid a 5% commission based on gross sales dollars.
• Phoenix's sales manager oversees the placement of local advertising contracts, which totaled $54,000 for the year. Local property taxes amounted to $14,500. The sales manager's $65,000 salary is set by Phoenix's store manager. In contrast, the store manager's $134,000 salary is determined by Fog City's vice president
• Phoenix incurred $6,800 of other noncontrollable costs along with $10,000 of income tax expense.
• Nontraceable (common) corporate overhead totaled $68,000.
Fog City's corporate headquarters is located in Portland, and the company uses responsibility accounting to evaluate performance.
Required:
Prepare a segmented income statement for the Phoenix store, being sure to disclose the segment contribution margin, the segment profit margin, and net income.