Appleton Manufacturing produces ceramic teapots. Appleton allocates overhead based on the number of direct labor hours. The company is looking into using a standard cost system and has developed the following standards (one "unit" is a batch of 100 teapots): (Click the icon to view the standards.) Actual cost and operating data from the most recent month are as follows: 2(Click the icon to view the actual results.) All manufacturing overhead is allocated on the basis of direct labor hours. Read the requirements? Requirement 1. Calculate the standard cost of one batch. Standard cost Standard cost per batch Direct materials Direct labor Variable MOH Fixed MOH Total standard cost Requirement 2a. Calculate the direct material variances. (Enter the variances as positive numbers. Enter currency amounts to the nearest cent and your answers to the nearest whole dollar. Label the variances as favorable (F) or unfavorable (U). Abbreviations used: DM = Direct materials.) First, determine the formula for the price variance, then compute the price variance for direct materials. | ( J) = DM price variance Determine the formula for the quantity variance, then compute the quantity variance for direct materials. x J) = |x(L DM quantity variance (8) Requirement 2b. Calculate the direct labor variances. (Enter the variances as positive numbers. Enter currency amounts to the nearest cent an your answers to the nearest whole dollar. Label the variances as favorable (F) or unfavorable (U). Abbreviations used: DL = Direct labor.) First, determine the formula for the rate variance, then compute the rate variance for direct labor. (9) x (10) (11) ) = ) = DL rate variance (12) First, determine the formula for the efficiency variance, then compute the efficiency variance for direct labor. (13) XL (14) (15) ) = x DL efficiency variance | (16) Requirement 2c. Calculate the variable manufacturing overhead variances. (Enter the variances as positive numbers. Enter currency amounts to the nearest cent and your answers to the nearest whole dollar. Label the variances as favorable (F) or unfavorable (U).) First, determine the formula for the rate variance, then compute the rate variance for variable manufacturing overhead. (17) (18) (19) ) = ]) = Variable overhead rate variance (20) Now compute the variable manufacturing overhead efficiency variance. First determine the formula for the efficiency variance, then compute the efficiency variance for variable manufacturing overhead. (21) Ixl (22) ) = Variable overhead efficiency variance (24) Requirement 2d. Calculate the fixed manufacturing overhead variances. (Enter the variances as positive numbers. Label the variances as favorable (F) or unfavorable (U). Abbreviations used: MOH = Manufacturing overhead) Begin by computing the fixed manufacturing overhead budget variance. First determine the formula for the budget variance, then compute the budget variance for fixed manufacturing overhead. Fixed MOH = budget variance (25) - (26) Now compute the fixed manufacturing overhead volume variance. First determine the formula for the volume variance, then compute the volume variance for fixed manufacturing overhead. Fixed MOH = volume variance (28) (29) 129 - -- | | Requirement 3. Have the company's managers done a good job or a poor job controlling materials, labor and overhead costs? Why or w Print Overall, the managers have done a (31) - job of controlling materials, labor, and overhead costs. This is evidenced by the fact that they have (32) Requirement 4. Describe how the company's managers can benefit from the standard costing system. (If a box is not used in the table, leave th box empty; do not select a label.) The following are benefits of a standard costing system: (33) (34) (35) (36) (37) Do you think the company should continue with the standard cost system? The company (38) 1: Data Table Standards: Direct material 70 pounds per batch at $1.00 per pound Direct labor 5.0 hours per batch at $14.00 per hour Variable MOH standard rate $2.00 per direct labor hour Predetermined fixed MOH standard rate $5.00 per direct labor hour Total budgeted fixed MOH cost $1,150 2: Data Table Purchased 2,250 pounds at a cost of $0.50 per pound Used 2,200 pounds in producing 30 batches Actual direct labor cost of $2,336 at an average direct labor cost per hour of $14.60 Actual variable MOH $336 Actual fixed MOH $1,650 3: Requirements 1. Calculate the standard cost of one batch. 2. Calculate the following variances: a. The direct material variances. b. The direct labor variances. c. The variable manufacturing overhead variances. d. The fixed manufacturing overhead variances. 3. Have the company's managers done a good job or a poor job controlling materials, labor, and overhead costs? Why or why not? 4. Describe how the company's managers can benefit from the standard costing system. Do you think the company should continue with the standard cost system? (1) O O Actual hours Actual price Actual quantity purchased Actual quantity used O Standard hours allowed O Standard price Standard quantity allowed (2) O O Actual hours Actual price O Actual quantity purchased O Actual quantity used O Standard hours allowed O Standard price Standard quantity allowed (4) O OF (3) O O Actual hours Actual price Actual quantity purchased Actual quantity used Standard hours allowed O Standard price Standard quantity allowed OU (5) O O Actual hours O Actual price Actual quantity purchased O Actual quantity used O Standard hours allowed O Standard price Standard quantity allowed (6) O Actual hours O Actual price Actual quantity purchased Actual quantity used O Standard hours allowed O Standard price Standard quantity allowed (8) O (7) O O Actual hours Actual price Actual quantity purchased O Actual quantity used O Standard hours allowed O Standard price Standard quantity allowed OOO > Standard hours allowed O Standard rate (9) O O Actual hours O Actual quantity purchased Actual rate O Standard hours allowed O Standard rate (10) O O Actual hours Actual quantity purchased O Actual rate Standard hours allowed O Standard rate (11) O O Actual hours Actual quantity purchased O Actual rate (12) O OF OU Standard hours allowed O Standard rate (13) O O Actual hours Actual quantity purchased O Actual rate Standard hours allowed Standard rate (14) O O Actual hours Actual quantity purchased O Actual rate Standard hours allowed O Standard rate (15) O O Actual hours Actual quantity purchased O Actual rate (16) O OF OU (17) Standard hours allowed O Standard rate o O Actual hours Actual quantity purchased O Actual rate Standard hours allowed Standard rate O (18) O O Actual hours O Actual quantity purchased O Actual rate Standard hours allowed Standard rate (19) O O Actual hours Actual quantity purchased Actual rate (20) O OF OU O Standard hours allowed O Standard rate (21) O O Actual hours O Actual quantity purchased O Actual rate Standard hours allowed O Standard rate (22) O O Actual hours O Actual quantity purchased O Actual rate Standard hours allowed O Standard rate (23) O O Actual hours Actual quantity purchased O Actual rate (24) O OF OU (25) O Actual fixed overhead Budgeted fixed overhead Standard hours allowed O Standard quantity allowed Standard rate Std. fixed overhead cost allocated to production (26) O (27) O Actual fixed overhead Budgeted fixed overhead Standard hours allowed O Standard quantity allowed Standard rate Std. fixed overhead cost allocated to production CT (28) O Actual fixed overhead Budgeted fixed overhead Standard hours allowed O Standard quantity allowed Standard rate Std. fixed overhead cost allocated to production (29) O Actual fixed overhead Budgeted fixed overhead O Standard hours allowed O Standard quantity allowed Standard rate Std. fixed overhead cost allocated to production (30) O OF OU (31) O O good poor (32) high overhead costs Olow overhead costs O mostly favorable variances mostly unfavorable variances (33) O Lean thinking focuses on looking at the past data and standards. O Standard costing systems simplify bookkeeping. O Standards are often used as the basis for many components in the master budget. O Standard costs never become outdated or inaccurate. O Standards create a benchmark by which to judge actual costs. The use of practical, or attainable, standards should increase employee motivation. Print (34) O Lean thinking focuses on looking at the past data and standards. O Standard costing systems simplify bookkeeping. O Standards are often used as the basis for many components in the master budget. O Standard costs never become outdated or inaccurate, O Standards create a benchmark by which to judge actual costs. The use of practical, or attainable, standards should increase employee motivation (35) O Lean thinking focuses on looking at the past data and standards. O Standard costing systems simplify bookkeeping. O Standards are often used as the basis for many components in the master budget. O Standard costs never become outdated or inaccurate. O Standards create a benchmark by which to judge actual costs. The use of practical, or attainable, standards should increase employee motivation. (36) O Lean thinking focuses on looking at the past data and standards. O Standard costing systems simplify bookkeeping. O Standards are often used as the basis for many components in the master budget. O Standard costs never become outdated or inaccurate, O Standards create a benchmark by which to judge actual costs. The use of practical, or attainable, standards should increase employee motivation. (37) O Lean thinking focuses on looking at the past data and standards. O Standard costing systems simplify bookkeeping Standards are often used as the basis for many components in the master budget. O Standard costs never become outdated or inaccurate. O Standards create a benchmark by which to judge actual costs. The use of practical, or attainable, standards should increase employee motivation. (38) O O should continue the standard cost system if the benefits outweigh the costs should not continue the standard cost system