Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Apple Clothing Ltd is a manufacturing firm producing clothing items. The company is using a standard costing system for planning and controlling purposes. The standard

Apple Clothing Ltd is a manufacturing firm producing clothing items. The company is using a standard costing system for planning and controlling purposes. The standard cost card of the product, SAGA, reveals the following information:

Direct materials: 4 yards at $4.00 $16.00

Direct labour: 1.5 hours at $10.00 15.00

Variable overhead: 1.5 hours at $3.004.50

Fixed overhead: 1.5 hours at $7.00 10.50

Standard cost per unit$46.00

The company manufactured and sold 18,000 units of product during the last year. A total of 70,200 yards of material was purchased during the year at the cost of $4.20 per yard. All of this material was used to manufacture all the outputs. The company records showed no beginning or ending inventories for the year.

From the payroll records, it indicated payments of actual labour cost of $9.75 per hour for a total of 29,250 direct labour-hours worked.

Overhead costs were applied to products on the basis of direct labour hours. The amount of actual variable overhead costs incurred were $90,000.

For fixed overheads, the planned activity level (direct labour hours) was 22,500 hours. Budgeted fixed overhead costs as shown on the flexible budget were $157,500, while actual fixed overhead costs incurred were $156,000.

Required:

For the purpose of preparing the monthly performance report for the last month, calculate the following cost variances:

(a)Direct material price variance

(b)Direct material quantity variance

(c)Direct labour rate variance

(d)Direct labour efficiency variance

(e)Variable overhead spending variance

(f)Variable overhead efficiency variance

(g)Fixed overhead budget variance

(h)Fixed overhead volume variance

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

Modern Management Concepts And Skills

Authors: Samuel Certo, S Certo

15th global Edition

978-1292265193, 1292265191

More Books

Students also viewed these Accounting questions

Question

123 in some base is 3723 in base 10. What is that base

Answered: 1 week ago