Make a reconcilliation of master budget operation income

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Reference no: EM1313352

Reconciliation of Master Budget Operating income, Flexible Budget Operating Income and Actual operating Income.

Downes Consolidated Industries International uses a standard cost system and records standards in the accounting records. The standard costs for one unit of one of its products are as follows.

Direct Materials, 3lbs.@$20 per lb.

$ 60.00

Direct labor, 2 hrs. @$15 per hr.

$ 30.00

Variable overhead, 4machine hrs. @$1 per hr

$ 4.00

Fixed overhead, 4 machine hrs.@$2.50 per hr

$ 10.00

Total

$104.00



Overhead is applied on the basis of machine hours. The planned level of activity(denominator level) is 320,000 machine hours. The total budgeted fixed overhead is $800,000.

Other budgeted items are: 
Unit selling price, $170,00 per unit
Variable selling & administrative expenses, $5 per unit
Fixed selling & administrative expenses, $160,000.
Planned level of production and sales, 80,000.

ACTUAL RESULTS:
Direct materials purchased, 250,000 lbs.@$22 per lb.
Direct materials used, 240,000
Direct labor, 150,000 hrs, total cost, $2,225,000
Variable overhead, $340,000
Fixed overhead, $810,000
Units produced, 82,000 Units
Units sold, 80,500
Selling price per unit,160,00
Variable selling and administrative expenses, $410,000.
Fixed selling & administrative , $175,000.
Actual machine hours,330,000.

Question:
Prepare a reconcilliation of Master Budget Operation Income, Flexible Budget Operating,and Actual Operating Income. Your reconcilliation should be properly headed and presented as follows:

Master Budget Operating Income
Plus &/or Minus appropriate variances
Felxible Budget Operating Income
Plus &/or Minus appropriate variances 
Actual Operating Income

Reference no: EM1313352

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