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Babylon Corporation manufactures luxury sofa sets and uses a standard cost system. It allocates overhead costs based on quantity of direct materials. The companys performance
Babylon Corporation manufactures luxury sofa sets and uses a standard cost system. It allocates overhead costs based on quantity of direct materials. The companys performance report for January includes the following selected data.
Static Budget (300 sofa sets) | Actual Production (280 sofa sets) | Explanations | |
Sales Revenue | $ 500,000 | 300 x $2000 | |
$532,000 | 280 x $1900 | ||
Variable manufacturing costs: | |||
Direct Materials | 62,100 | 9,000 meters x $6.90 | |
56,079 | 8,370 meters x $6.70 | ||
Direct Labor | 79,200 | 9,900 hrs x $ 8.00 | |
71,604 | 9,180 hrs x $ 7.80 | ||
Variable Manufacturing Ovh | 27,000 | 9,000 meters x $ 3.00 | |
28,458 | 8,370 meters x $ 3.40 | ||
Fixed manufacturing costs: | |||
Fixed Manufacturing Ovh. | 90,000 | 90,000 | |
Compute total, price and quantity (efficiency) variances for direct materials and direct labor and total, controllable and volume variances for manufacturing overhead.
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