Chillco Corporation produces containers of frozen food. During April, Chillco produced 1,450 cases of food and incurred
Question:
Chillco Corporation produces containers of frozen food. During April, Chillco produced 1,450 cases of food and incurred the following actual costs.
Variable overhead ............................................................................................................................................. $ 11,000 Fixed overhead ................................................................................................................................................. 26,000 Actual labor cost (8,000 direct-labor hours) .................................................................................................... 151,200 Actual material cost (30,000 pounds purchased and used) ............................................................................ 66,000 Overhead is budgeted and applied using direct-labor hours in a standard costing system. Standard cost and annual budget information are as follows:
Standard Costs per Case Direct labor (5 hours at $18 per hour) ............................................................................................................. $ 90.00 Direct material (20 pounds at $2 per pound) .................................................................................................. 40.00 Variable overhead (5 direct-labor hours at $1.50 per hour) ........................................................................... 7.50 Fixed overhead (5 direct-labor hours at $3 per hour) .................................................................................... 15.00 Total .................................................................................................................................................................. $152.50 Annual Budget Information Variable overhead ................................................................................................................ $150,000 Fixed overhead .................................................................................................................... $300,000 Planned activity for year ...................................................................................................... 100,000 direct-labor hours Required:
1. Prepare as complete an analysis of cost variances as is possible from the available data.
2. Build a spreadsheet: Construct an Excel spreadsheet to solve the preceding requirement.
Show how the solution will change if the following information changes: the standard rates were $17.50 per hour for direct labor, and $1.60 per direct-labor hour for variable overhead.
Step by Step Answer:
Managerial Accounting Creating Value In A Dynamic Business Environment
ISBN: 9781259569562
11th Edition
Authors: Ronald W.Helton, David E. Platt