Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Arzu Inc. produces premium protective car covers. The direct materials and direct labour standards for one car cover are as follows: Direct materials Direct

imageimage

Arzu Inc. produces premium protective car covers. The direct materials and direct labour standards for one car cover are as follows: Direct materials Direct labour Variable overhead Standard Quantity or Hours Standard Price or Rate 8.50 metres of cloth 0.20 hours $ 11 per metre $ 19 per hour Standard Cost $93.50 $ 3.80 0.20 hours $ 8 per hour $ 1.60 Budgeted fixed overhead cost is $19,300, and the normal production volume is 2,985 car covers. Overhead is applied on the basis of direct labour-hours. In September, the following activity was recorded: 23,800 metres of cloth were purchased at a cost of $10.50 per metre. All of the purchased material was used to produce 2,800 car covers. 535 direct labour-hours were recorded at a total labour cost of $10,165. Actual variable overhead cost was $4,600, and fixed overhead cost was $18,700. Required: 1. Compute all direct materials variances for September. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) Answer is complete and correct. Direct materials price variance Direct materials quantity variance Total direct material cost variance $ 11,900 F $ 0 $ 11,900 None F 2. Compute all direct labour cost variances for September. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) 2. Compute all direct labour cost variances for September. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) Answer is complete and correct. Direct labour rate variance $ 0 None Direct labour efficiency variance $ 475 Total direct labour cost variance $ 475 F F 3. Calculate the total under- or overapplied overhead. Show all the variances calculated and indicate if each variance is favourable or unfavourable. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance). Do not round intermediate calculations and round "Fixed overhead volume variance and total variance" to 2 decimal places.) Answer is not complete. Variable overhead rate variance $ 320 U Variable overhead efficiency variance F Variable overhead total variance U Fixed overhead budget variance $ 600 F Fixed overhead volume variance U Fixed overhead total variance U

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

Introduction to Managerial Accounting

Authors: Peter C. Brewer, Ray H. Garrison, Eric Noreen, Suresh Kalagnanam, Ganesh Vaidyanathan

5th Canadian edition

77429494, 1259105709, 1260480798, 978-1259105708

More Books

Students also viewed these Accounting questions