Alumnet Stamping Company manufactures a variety of products made of plastic and aluminum components During the winter months, substantially all production capacity is devoted to lawn sprinklers for the following spring and summer seasons. Other products are manufactured during the remainder of the year. Because a variety of products are manufactured throughout the year, factory volume is measured using production labor hours rather than units of production The company has developed standard costs for its several products. It sets standard costs for each year in the preceding October. The standard cost of a sprinkler this year was $4.00, computed as follows Direct materials Aluminum Plastic 0.2 pound x $0.40 1.0 pound x $0.38 0.3 hour x $9.00 $0.08 0.38 2.70 Production labor Overhead Variable Fixed* 0.3 hour x $1.60 0.3 hour x $1.20 0.48 0.36 $4.00 Total *Calculated based on annual practical capacity of 30,000 production labor-hours During February of this year, 8,500 good sprinklers were manufactured. The following costs were incurred and charged to production Direct Material Aluminum Plastic: Regular Purchased 1,800 pounds at $0.48/pound; used 1,900 pounds Purchased 3,000 pounds at $0.50/pound; used 6,000 pounds Low gradePurchased 6,000 pounds at $0.29/pound; used 3,500 pounds Direct Labor Production labor Factory Overhead Variable Fixed 2,700 labor-hours at $10.00 $7,200 $3,100 Plastic shortages forced the company to purchase lower-grade plastic than called for in the standards Required Calculate the following variances . Direct material price and usage Direct labor rate and efficiency Variable overhead spending and efficiency Fixed overhead spending (budget) and production-volume Alumnet Stamping Company manufactures a variety of products made of plastic and aluminum components During the winter months, substantially all production capacity is devoted to lawn sprinklers for the following spring and summer seasons. Other products are manufactured during the remainder of the year. Because a variety of products are manufactured throughout the year, factory volume is measured using production labor hours rather than units of production The company has developed standard costs for its several products. It sets standard costs for each year in the preceding October. The standard cost of a sprinkler this year was $4.00, computed as follows Direct materials Aluminum Plastic 0.2 pound x $0.40 1.0 pound x $0.38 0.3 hour x $9.00 $0.08 0.38 2.70 Production labor Overhead Variable Fixed* 0.3 hour x $1.60 0.3 hour x $1.20 0.48 0.36 $4.00 Total *Calculated based on annual practical capacity of 30,000 production labor-hours During February of this year, 8,500 good sprinklers were manufactured. The following costs were incurred and charged to production Direct Material Aluminum Plastic: Regular Purchased 1,800 pounds at $0.48/pound; used 1,900 pounds Purchased 3,000 pounds at $0.50/pound; used 6,000 pounds Low gradePurchased 6,000 pounds at $0.29/pound; used 3,500 pounds Direct Labor Production labor Factory Overhead Variable Fixed 2,700 labor-hours at $10.00 $7,200 $3,100 Plastic shortages forced the company to purchase lower-grade plastic than called for in the standards Required Calculate the following variances . Direct material price and usage Direct labor rate and efficiency Variable overhead spending and efficiency Fixed overhead spending (budget) and production-volume
