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5- Jennifer has just been promoted to manager of the piston division of Car Parts Co. The division, which manufactures pistons for hydraulic drives, uses
5- Jennifer has just been promoted to manager of the piston division of Car Parts Co. The division, which manufactures pistons for hydraulic drives, uses a standard cost system and calculates the standard cost of a completed piston as $85, as follows: Omantity Price Cost per piston Piston shaft 1 $35 piston shaft $35 Shaft housing 1 $20 housing 20 Direct labor 0.4 hours $15 hour 6 V.factory overhead 0.4 hours $10/hour 4 F. factory overhead 0.4 hours $50/hour 20 Total standard cost $85 The fixed overhead rate is based on an estimated 1000 units per month. Direct labor is nearly a fixed cost in this division. Selling and administrative costs are $50 000 per month plus $10 per piston sold. The following information is for production during April: Number of pistons manufactured 950 Purchase of 1000 piston shafts $34 950 Number of piston shafts used 954 Purchase of 1000 shaft housings $20 000 Number of shaft housings used 950 Direct labor costs (397 hours) S 6 120 Variable factory overhead costs $ 3 677 Fixed factory overhead costs $18 325 Selling and administrative costs $59 101 The entity's policy is to record materials price variances at the time materials are purchased. You may want to use a spreadsheet to perform calculations. Required (a) Prepare a flexible cost budget for the month of April. (6) Calculate all of the common direct cost variances. (Note: There are no variances for shaft housings) (c) Calculate all common factory overhead variances
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