In an overseas location, Warrenton Fashions Inc. manufactures ladies' blouses of one quality, produced in lots to
Question:
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During June, Warrenton worked on three orders, for which the month's job cost records disclose the following:
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The following information is also available:
(a) Warrenton purchased 95,000 yards of material during June at a cost of $106,400. The materials price variance is recorded when goods are purchased. All inventories are carried at standard cost.
(b) Direct labor during June amounted to $55,000. According to payroll records, production employees were paid $5 per hour. (The legal minimum wage in this location is $4 per hour.)
(c) Factory overhead during June amounted to $45,600.
(d) A total of $576,000 was budgeted for factory overhead for the year, based on estimated production at the plant's normal capacity of 48,000 dozen blouses annually. Factory overhead at this level of production is 40% fixed and 60% variable. Factory overhead is applied on the basis of direct labor hours.
(e) There was no work in process at June 1. During June, Lots 22 and 23 were completed. All material was issued for Lot 24, which was 80% completed as to direct labor.
Required:
(1) Prepare a schedule showing the computation of standard cost of Lots 22, 23, and 24 for June.
(2) Prepare a schedule showing the computation of the materials purchase price variance for June.
(3) Prepare a schedule showing, for each lot produced during June, computations of the following variances, indicating whether they are favorable or unfavorable:
(a) Materials quantity variance
(b) Labor efficiency variance
(c) Labor rate variance
(4) Prepare a schedule showing computations of the factory overhead controllable and volume variances for June. Indicate whether the variances are favorable or unfavorable.
Step by Step Answer:
1 Standard cost of production Quantity Standard Cost Total Lot dozens per dozen Stan...View the full answer
