Organet Stamping Company manufactures a variety of products made of plastic and aluminum components. During the winter months, substantially all production capacity is devoted to lawn sprinklers for the following spring and summer seasons. Other products are manufactured during the remainder of the year. Because a variety of products are manufactured throughout the year, factory volume is measured using production labor hours rather than units of production.

Production volume has grown steadily for the past several years, as the following schedule of production labor indicates:

This year .........32,000 hours

1 year ago ........30,000 hours

2 years ago .......27,000 hours

3 years ago .......28,000 hours

4 years ago .......26,000 hours

The company has developed standard costs for its several products. It sets standard costs for each year in the preceding October. The standard cost of a sprinkler this year was $4.00, computed as follows:

During February of this year, 8,500 good sprinklers were manufactured. The following costs were incurred and charged to production:

Materials price variations are charged to a materials price variation account at the time the invoice is entered. All materials are carried in inventory at standard prices. Materials purchases for February follow:

Required

Compute the following for February:

1. The total variance from standard cost for the units produced this period.

2. The spending (budget) variance for the fixed portion of overhead costs.

3. The labor efficiency variance.

4. The labor rate variance.

5. The total variable manufacturing cost variance.

6. The variable overhead spending, efficiency, and flexible-budget variances.

7. The production-volume variance.

8. The materials variances (purchase-price and usage). Also comment on the effects of using materials of different grades.

Transcribed Image Text:

Direct materials: 0.2 pound x $ 10.40 per pound $0.08 Aluminum 1.0 pound x $ 10.38 per pound Plastic 0.38 0.3 hour x $ ;9.00 per hour Production labor 2.70 Overhead: 0.3 hour x $1.60 per hour Variable 0.48 Fixed* 0.3 hour x $1.20 per hour 0.36 $4.00 Total