CASE 1117 Working Backwards from Variance Data LO 111, LO 112, LO 113 You have recently accepted a position with Lorthen Inc As part of your duties, you review the variances that are reported for each period and make a presentation to the company's executive committee Earlier this morning you received the variances for one of the company's major products for the most recent period After reviewing the variances and organizing the data for your presentation, you accidentally placed the material on top of some papers that were going to the shredder In the middle of lunch you suddenly realized your mistake and dashed to the shredding room There you found the operator busily feeding your pages through the machine You managed to pull only part of one page from the feeding chute, which contains the following information Standard cost card direct material 2 0 meters at $16 00 per meter $32 00 Direct labor 1 0 hours at $15 00 per hours $15 00 Veriable overhead 1 0 hours at $9 0 per hours $9 0 total standard cost quality or efficicency variance price or rate variance direct material $608000 $32000 U $11600 F Direct labor $285000 $15000 U $4000 U Variable overhead $171000 Ruined by stredder $4000 F The standard for variable overhead is based on direct labor hours All of the materials purchased during the period were used in production At lunch your supervisor said how pleased she was with your work and that she was looking forward to your presentation that afternoon You realize that to avoid looking like a bungling fool you must somehow generate the necessary backup data for the variances before the executive committee meeting starts in one hour Required How many units were produced during the period How many meters of direct materials were purchased and used in production What was the actual cost per meter of material How many actual direct labor hours were worked during the period What was the actual rate per direct labor hour How much actual variable manufacturing overhead cost was incurred during the period

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CASE 1117 Working Backwards from Variance Data [LO 111, LO 112, LO 113] You have recently accepted a position with Lorthen Inc. As part of

CASE 1117 Working Backwards from Variance Data [LO 111, LO 112, LO 113]

You have recently accepted a position with Lorthen Inc. As part of your duties, you review the variances that are reported for each period and make a presentation to the company's executive committee.

Earlier this morning you received the variances for one of the company's major products for the most recent period. After reviewing the variances and organizing the data for your presentation, you accidentally placed the material on top of some papers that were going to the shredder. In the middle of lunch you suddenly realized your mistake and dashed to the shredding room. There you found the operator busily feeding your pages through the machine. You managed to pull only part of one page from the feeding chute, which contains the following information:

Standard cost card

direct material 2.0 meters at $16.00 per meter	$32.00
Direct labor 1.0 hours at $15.00 per hours	$15.00
Veriable overhead 1.0 hours at $9.0 per hours	$9.0

	total standard cost	quality or efficicency variance	price or rate variance
direct material	$608000	$32000 U	$11600 F
Direct labor	$285000	$15000 U	$4000 U
Variable overhead	$171000	Ruined by stredder	$4000 F

The standard for variable overhead is based on direct labor-hours. All of the materials purchased during the period were used in production.

At lunch your supervisor said how pleased she was with your work and that she was looking forward to your presentation that afternoon. You realize that to avoid looking like a bungling fool you must somehow generate the necessary backup data for the variances before the executive committee meeting starts in one hour.

Required:

How many units were produced during the period?

How many meters of direct materials were purchased and used in production?

What was the actual cost per meter of material?

How many actual direct labor-hours were worked during the period?

What was the actual rate per direct labor-hour?

How much actual variable manufacturing overhead cost was incurred during the period?