Beal Manufacturing Company's costing system has two direct cost categories: direct materials and direct manufacturing labour. Manufacturing

Question:

Beal Manufacturing Company's costing system has two direct cost categories: direct materials and direct manufacturing labour. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of standard direct manufacturing labour-hours (DMLH). At the beginning of 2015, Beal adopted the following standards for its manufacturing costs:

InputCost per Output Unit

Direct materials....................................3 kg at $5 per kg................$ 15

Direct manufacturing labour..............5 hours at $15 per hour..................75

Manufacturing overhead:

Variable.................................................$6 per DMLH..................30

Fixed...................................................$8 per DMLH..................40

Standard manufacturing cost per output unit.....................................$160

The denominator level for total manufacturing overhead per month in 2015 is 40,000 DMLH. Beal's flexible budget for January 2015 was based on this denominator level. The records for January indicate the following:

Direct materials purchased..........................25,000 kg at $5.20/kg

Direct materials used...............................................23,100 kg

Direct manufacturing labour................40,100 hours at $14.60/hour

Total actual manufacturing overhead (variable and fixed)....$600,000

Actual production........................................7,800 output units

Required

1. Prepare a schedule of total standard manufacturing costs for the 7,800 output units in January 2015.

2. For January 2015, calculate the following variances, indicating whether each is favourable (F) or unfavourable (U):

a. Direct materials rate variance, based on purchases.

b. Direct materials efficiency variance.

c. Direct manufacturing labour rate variance.

d. Direct manufacturing labour efficiency variance.

e. Total manufacturing overhead rate variance.

f. Variable manufacturing overhead efficiency variance.

g. Production-volume variance

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Related Book For  book-img-for-question

Cost Accounting A Managerial Emphasis

ISBN: 978-0133138443

7th Canadian Edition

Authors: Srikant M. Datar, Madhav V. Rajan, Charles T. Horngren, Louis Beaubien, Chris Graham

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