Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

3 Harmon Household Products, Inc., manufactures a number of consumer items for general household use. One of these products, a chopping board, requires an expensive

3

Harmon Household Products, Inc., manufactures a number of consumer items for general household use. One of these products, a chopping board, requires an expensive hardwood. During a recent month, the company manufactured 3,400 chopping boards using 2,584 board feet of hardwood. The hardwood cost the company $19,638.

The companys standards for one chopping board are 0.68 board feet of hardwood, at a cost of $8.00 per board foot.

Required:

1.

According to the standards, what cost for wood should have been incurred to make 3,400 chopping blocks? How much greater or less is this than the cost that was incurred?

Number of chopping blocks

Number of board feet per chopping block

Standard board feet allowed

Standard cost per board foot

Total standard cost

Actual cost incurred

Standard cost

Spending varianceunfavorable

2.

Break down the difference computed in (1) above into a materials price variance and a materials quantity variance.(Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

Materials price variance

F or U

Materials quantity variance

F or U

4

AirMeals, Inc., prepares in-flight meals for a number of major airlines. One of the companys products is stuffed cannelloni with roasted pepper sauce, fresh baby corn, and spring salad. During the most recent week, the company prepared 3,500 of these meals using 950 direct labor-hours. The company paid these direct labor workers a total of $10,450 for this work, or $11.00 per hour.

According to the standard cost card for this meal, it should require 0.30 direct labor-hours at a cost of $9.50 per hour.

Required:

1.

According to the standards, what direct labor cost should have been incurred to prepare 3,500 meals? How much does this differ from the actual direct labor cost?

Number of meals prepared

Standard direct labor-hours per meal

Total direct labor-hours allowed

Standard direct labor cost per hour

Total standard direct labor cost

Actual cost incurred

Standard direct labor cost

Spending varianceunfavorable

2.

Break down the difference computed in (1) above into a labor rate variance and a labor efficiency variance. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

Labor rate variance

F or U

Labor efficiency variance

F or U

rev: 08_14_2013_QC_ 33806, 11_25_2013_QC_41315

5

Order Up, Inc., provides order fulfillment services for dot.com merchants. The company maintains warehouses that stock items carried by its dot.com clients. When a client receives an order from a customer, the order is forwarded to Order Up, which pulls the item from storage, packs it, and ships it to the customer. The company uses a predetermined variable overhead rate based on direct labor-hours.

In the most recent month, 120,000 items were shipped to customers using 4,100 direct labor-hours. The company incurred a total of $11,480 in variable overhead costs.

According to the companys standards, 0.03 direct labor-hours are required to fulfill an order for one item and the variable overhead rate is $2.85 per direct labor-hour.

Required:

1.

According to the standards, what variable overhead cost should have been incurred to fill the orders for the 120,000 items? How much does this differ from the actual variable overhead cost?

Number of items shipped

Standard direct labor-hours per item

Total direct labor-hours allowed

Standard variable overhead cost per hour

Total standard variable overhead cost

Actual variable overhead cost incurred

Standard variable overhead cost

Spending varianceUnfavorable

2.

Break down the difference computed in (1) above into a variable overhead rate variance and a variable overhead efficiency variance. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

Variable overhead rate variance

F or U

Variable overhead efficiency variance

F or U

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing Cases An Interactive Learning Approach

Authors: Steven M Glover, Douglas F Prawitt

4th Edition

0132423502, 978-0132423502

More Books

Students also viewed these Accounting questions