=+12-41 KKK Review of Chapters 11 and 12, 3-variance analysis (CPA, adapted) OBJECTIVES 4, 5 The 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

(DLH). At the beginning of 2015, Beal adopted the following standards for its manufacturing costs:

Input Cost per output unit Direct materials 3 kg at $5 per kilogram $15.00 Direct manufacturing labour 5 hours at $15 per hour 75.00 Manufacturing overhead:

Variable $6 per DLH 30.00 Fixed $8 per DLH 40.00 Standard manufacturing cost per output unit $160.00 The denominator level for total manufacturing overhead per month in 2015 is 40000 direct manufacturing labour-hours. Beal Manufacturing’s flexible budget for January 2015 was based on this denominator level. The records for January indicated the following:

Direct materials purchased 25 000 kg at $5.20 per kilogram Direct materials used 23 100 kg Direct manufacturing labour 40 100 hours at $14.60 per hour Total actual manufacturing overhead (variable and fixed) $600 000 Actual production 7 800 output units Chapter 12: Flexible budgets, overhead cost variances and management control 503 M12_HORN3377_02_LT_C12.indd 503 2/09/13 3:50 PM Required 1 Prepare a schedule of total standard manufacturing costs for the 7800 output units in January 2015.

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

a direct materials price variance, based on purchases b direct materials efficiency variance c direct manufacturing labour price variance d direct manufacturing labour efficiency variance e total manufacturing overhead spending variance f variable manufacturing overhead efficiency variance g production-volume variance.