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8-40 Review of Chapters 7 and 8, three-variance analysis. (CPA, adapted) Beal Manufacturing Com. pany's costing system has two direct cost categories: direct materials and
8-40 Review of Chapters 7 and 8, three-variance analysis. (CPA, adapted) Beal Manufacturing Com. pany'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 DMLH. At the beginning of 2018, Beal adopted the following standards for its manufacturing costs: LO 4 2. a. Direct mall variance, $50 Input 3 kg at $5 per kg 5 hours at $15 per hour Cost per Output Unit Direct materials Direct manufacturing labour $ 15 75 Manufacturing overhead: 000 Variable $6 per DMLH 30 Fixed $8 per DMLH Standard manufacturing cost per output unit $160 The denominator level for total manufacturing overhead per month in 2018 is 40,000 DMLH. Beal's flexible budget for January 2018 was based on this denominator level. The records for January indicate the following: 40 Direct materials purchased Direct materials used Direct manufacturing labour Total actual manufacturing overhead (variable and fixed) Actual production 25,000 kg at $5.20/kg 23,100 kg 40,100 hours at $14.60/hour $600,000 7,800 output units Required 1. Prepare a schedule of total standard manufacturing costs for the 7,800 output units in January 2018. 2. For January 2018, calculate the following variances, indicating whether each is favourable (F) or unta- vourable (U): a. Direct materials rate variance, based on purchases. b. Direct materials efficiency variance. c. Direct manufacturing labour rate variance. eld. Direct manufacturing labour efficiency variance. e. Total manufacturing overhead rate variance. f. VMOH efficiency variance. g. Production-volume variance
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