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Actua McKnight manufactures coffee mugs that it sells to other companies for customizing with their own logos. McKnight prepares flexible budgets and uses a standard cost system to control manufacturing costs. The standard unit cost of a coffee mug is based on static budget volume of 59,700 coffee mugs per month: B (Click the icon to view the cost data.) ts Read tork Data table - $ 0.05 whe SQ 0.42 Direct Materials (0.2 lbs @ $0.25 per lb) Direct Labor (3 minutes @ $0.14 per minute) Manufacturing Overhead: Variable (3 minutes @ $0.04 per minute) Fixed (3 minutes @ $0.13 per minute) del $ 0.12 0.39 0.51 Total Cost per Coffee Mug $ 0.98 on favore quant or and uses a it cost of a er month Actual cost and production information for July 2024 follows: (Click the icon to view actual cost and production information.) Read the requirements. .51% More info .67% .19% 68% a. There were no beginning or ending inventory balances. All expenditures were on account b. Actual production and sales were 62,400 coffee mugs. c. Actual direct materials usage was 10,000 lbs, at an actual cost of $0.17 per Ib. d. Actual direct labor usage was 203,000 minutes at a total cost of $32,480. e. Actual overhead cost was $4,060 variable and $36,740 fixed. f. Selling and administrative costs were $120,000. 0% 4496 - x 624 etior Requirements Offee logo ontrol atic b the te the 1. Compute the cost and efficiency variances for direct materials and direct labor. 2. Journalize the purchase and usage of direct materials and the assignment of direct labor, including the related variances. 3. For manufacturing overhead, compute the variable overhead cost and efficiency variances and the fixed overhead cost and volume variances. 4. Journalize the actual manufacturing overhead and the allocated manufacturing overhead. Journalize the movement of all production costs from Work-in-Process Inventory. Journalize the adjusting of the Manufacturing Overhead account 5. McKnight intentionally hired more highly skilled workers during July. How did this decision affect the cost variances? Overall, was the decision wise? ly wh st; SI ences. 9 able (u ariance nce st Mcnight manulactures coffee mugs that it sells to other companies for Actual cost and production information for July 2024 follows Requirement 1. Compute the cost and efficiency variances for direct materials and direct labor. Begin with the cost variances. Select the required formulas, compute the cost variances for direct materials and direct labor, and identify whether oach variance is favorable (F) or unfavorable (U). (Abbreviations used: AC - actual cost: AQ = actual quantity, FOH = fixed overhead, SC - standard cost; SQ standard quantity.) Formula Variance Direct materials cost variance Direct labor cost variance Select the required formulas, compute the efficiency variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U). (Abbreviations used: AC - actual cost, AQ = actual quantity, FOH - fixed overhead, SC - standard cost, SQ - standard quantity) Formula Variance Direct materials officiency variance Direct labor efficiency variance Requirement 2. Journalize the purchase and usage of direct materials and the assignment of direct labor, including the related variances (Record debits first, then credits. Select the explanation on the last line of the journal entry table) Begin by journalizing the purchase of direct materials, including the related variance. (Prepare a single compound journal entry) Tor July 2024 follows: Begin by journalizing the purchase of direct materials, including the related variance. (Prepare a single compound journal entry) Date Accounts and Explanation Debit Credit Jul k est Now, journalize the usage of direct materials, including the related variance (Prepare a single compound journal entry) Date Accounts and Explanation Debit Credit Jul McKnight manufactures coffee mugs that it selfs to other companies for Actual cost and production information for July 2024 follows: Journalize the incurrance and assignment of direct labor costs, including the related varianots. (Prepare a single compound journal entry) Accounts and Explanation its Date Debit Credit vork Jul Test 6 Requirement 3. For manufacturing overhead, compute the variable overhead cost and officiency variances and the fixed overhead cost and volume variances Begin with the variable overhead cost and efficiency variances Select the required formulas, compute the variable overhead cost and efficiency variances, and identify whether each variance is favorable (F) or unfavorable (U). (Round any interim calculations to four decimal places, XXXXX, and your final answers to the nearest whole dollar. Abbreviations used: AC actual cost, AD = actual quantity: FOH = foved overhead, SC - standard cost, SQ = standard quantity. VOH variable overhead.) Formula Variance VOH cost varlance 04 Mcknight manufactures coffee mugs that it sells to other companies for el actual cost and production information for July 2024 follows. Requirement 3. For manufacturing overhead, computer the variable overhead cost and efficiency variances and the fixed overhead cost and volume variances Begin with the variable overhead cost and efficiency variances. Select the required formulas, compute the variable overhead cost and efficiency variances, and Identify whether each variance is favorable (F) or unfavorable (U). (Round any interim calculations to four decimal places, XxxXX, and your final answers to the nearest whole dollar, Abbreviations used: AC actual cost, AQ = actuat quantity, FOH = fixed overhead, SC - standard cost, SQ - standard quantity, VOH variable overhead.) Formula Variance VOH cost variance VOH efficiency variance Now compute the fixed overhead cost and volume variances. Select the required formulas, compute the fixed overhead cost and volume variances and identify whether each variance is favorable (F) or unfavorable (U). (Abbreviations used. AC actual cost: AQ - actual quantity, FOH = fixed overhead, SC = standard cost; SO standard quantity) Formula Variance FOH cost variance FOH volume variance Requirement 4. Joumalize the actual manufacturing overhead and the allocated manufacturing overhead. Journalize the movement of all production costs from Min bin Derse than that there that cald the win the set 44 McKnight manufactures coffee mugs that it sells to other companies for Actual cost and production information for July 2024 follows: Requirement 4. Journalize the actual manufacturing overhead and the allocated manufacturing overhead. Journalize the movement of all production costs from Work in Process Inventory. Journalize the adjusting of the Manufacturing Overhead account. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Begin by journalizing the entry to show the actual manufacturing overhead costs incurred. Accounts and Explanation Date Debit Credit Jul Journalice the applied manufacturing overhead Date Accounts and Explanation Debit Credit Jul McKnight manufactures coffee mugs that it sells to other companies for Actual cost and production information for July 2024 fo 18 Journalize the movement of all production from Work-in-Process Inventory Date Accounts and Explanation Debit Credit k Jul Test Journalize the adjusting of the Manufacturing Overhead account (Prepare a single compound journal entry) Date Accounts and Explanation Debit Credit Jul Might manufactures coffee mugs that it sells to other companies for Actual cost and production information for July 2024 follows: ts Date Accounts and Explanation Debit Credit JUL work 2/Test 16 Requirements. McKright intentionally hired more highly skilled workers during July. How did this decision affect the cost variances? Overall, was the decision wise? Hiring more-skilled higher cald labor led to direct labor cost variance. Given the direct labor efficiency variance, appear that these more killed workers performed centy The overall nettet thus management's decision was 0