8-43

The Gallo Company uses a flexible budget and standard costs to aid planning and control of its machining manufacturing operations. Its costing system for manufacturing has two direct-cost categories (direct materials and direct manufacturing laborlong dashboth variable) and two overhead-cost categories (variable manufacturing overhead and fixed manufacturing overhead, both allocated using direct manufacturing labor-hours). The following actual results are for August:

At the 30,000 budgeted direct manufacturing labor-hour level for August, budgeted direct manufacturing labor is $ 750,000, budgeted variable manufacturing overhead is $ 480,000, and budgeted fixed manufacturing overhead is $ 750,000.

The standard cost per pound of direct materials is $ 11.50. The standard allowance is 6 pounds of direct materials for each unit of product. During August, 20,000 units of product were produced. There was no beginning inventory of direct materials. There was no beginning or ending work in process. In August, the direct materials price variance was $ 1.10 per pound.

In July, labor unrest caused a major slowdown in the pace of production, resulting in an unfavorable direct manufacturing labor efficiency variance of $ 97,500. There was no direct manufacturing labor price variance. Labor unrest persisted into August. Some workers quit. Their replacements had to be hired at higher wage rates, which had to be extended to all workers. The actual average wage rate in August exceeded the standard average wage rate by $ 0.50 per hour.

1. Compute the following for August:

a. Total pounds of direct materials purchased

b. Total number of pounds of excess direct materials used

c. Variable manufacturing overhead spending variance

d. Total number of actual direct manufacturing labor-hours used

e. Total number of standard direct manufacturing labor-hours allowed for the units produced

f. Production-volume variance

P8-43 (similar to) Question Help The Gallo Company uses a Sexible budget and standard costs to aid planning and control of its machining manufacturing operations. Its costing system for manufacturing has two direct cost caegories (drect materials and direct manufacturing labor-boh vaniable) and two overhead-cost categories (variable manufacturing overhead and faed manufacturing overhead, both allocated using direct manufacturing labon-hours, The following actual results ane for August Click the loon to view the nesuts) Some addtional information about Gallo Company's budget, standard costs and labor folows /Click the loon to view addisional information.) Read the ements Requirement 1. Compube the lsted amounts for Auguslt Determine the formule, then complete the computiation for each. (Abbreviations uned DM Direct materials, mlgmanacturing, OHOread a Toral pounds of drect materials purchased Data Table Pounds of DM 179,300 Drect materials price arance (based on purchases)1 Direct materials officiency variance Direct manufacturing lator costs incurred Variable manufacturing overhead flexible-budget variance Variable manfacturing overhead efficiency variance Faed manufacturing overhead incurred 805,000 Uu 73 750 0,750 U 18,800 U 708,460 Print Done Choose from any list or enter any number in the input fields and then click Check