Accounting question
Hydro Inc. manufactures water sensors used by scientists to measure water quality. For the most
recent period ended Hydro manufactured and sold 53,250 sensors at a sales price of $290 per sensor.
The current period actual results also include the manufacturing process used 2.65 pounds of materials
per sensor that cost $32.50 per pound. Hydro employs skilled laborers for the manufacture of the
sensors and paid labor a rate of $45.00 per hour. Total labor hours worked were 186,375 for the period.
Variable manufacturing overhead costs equaled $14.00 per unit and variable selling costs were $11.00
per unit. Fixed costs equaled $1,100,000 for the period.
For the same period, Hydro’s static budget amounts included sales of 56,000 sensors at $300 each for
the period. Direct material budget cost standards are 2.50 pounds of materials per sensor at a cost of
$35.00 per pound. Direct labor budget cost standards are 3.0 direct labors hours per sensor at a cost of
$50 per hour. Variable cost budget standards are $15.00 per unit for manufacturing overhead and
$10.00 per unit for variable selling expenses. Fixed costs were planned to be $1,000,000 for the period