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Compeau Company established the following standards for materials, labor and manufacturing overhead (manufacturing overhead is applied based on direct labors): Quantity per unit Cost per
Compeau Company established the following standards for materials, labor and manufacturing overhead (manufacturing overhead is applied based on direct labors): Quantity per unit Cost per quantity Total per unit Cost Materials 6 gallons $5.00 per gallon $30.00 Direct Labor 1.5 hours $25.00 per hour $37.50 Manufacturing Overhead 1.5 hours $10 per hour $15.00 Total per unit cost $82.50 During the period, Compeau manufactured 1,200 units of product. The company purchased 6,800 gallons of materials at a cost of $37,400 and used all 6,800 gallons in production. Additionally, the company used 1,400 direct labor hours at a cost of $27 per hour and incurred total manufacturing overhead costs of $16,800 Compute the materials price, quantity and spending variances. 1 . 2. Compute the labor rate, efficiency and spending variances. 2. Compute the labor rate, efficiency and spending variances, 3. b. Which of the following would be the most likely explanation for the variances computed above? Purchasing low quality materials resulted in more materials waste and labor hours than expected Purchasing high quality materials resulted in paying workers a lower wage than expected Purchasing low quality materials and using more low skilled workers than expected resulted in less spoilage and fewer labor hours than expected, Purchasing high quality materials and using more highly skilled workers than planned resulted in less spoilage and fewer labor hours than expected. d. Compeau Company established the following standards for materials, labor and manufacturing overhead (manufacturing overhead is applied based on direct labors): Quantity per unit Cost per quantity Total per unit Cost Materials 6 gallons $5.00 per gallon $30.00 Direct Labor 1.5 hours $25.00 per hour $37.50 Manufacturing Overhead 1.5 hours $10 per hour $15.00 Total per unit cost $82.50 During the period, Compeau manufactured 1,200 units of product. The company purchased 6,800 gallons of materials at a cost of $37,400 and used all 6,800 gallons in production. Additionally, the company used 1,400 direct labor hours at a cost of $27 per hour and incurred total manufacturing overhead costs of $16,800 Compute the materials price, quantity and spending variances. 1 . 2. Compute the labor rate, efficiency and spending variances. 2. Compute the labor rate, efficiency and spending variances, 3. b. Which of the following would be the most likely explanation for the variances computed above? Purchasing low quality materials resulted in more materials waste and labor hours than expected Purchasing high quality materials resulted in paying workers a lower wage than expected Purchasing low quality materials and using more low skilled workers than expected resulted in less spoilage and fewer labor hours than expected, Purchasing high quality materials and using more highly skilled workers than planned resulted in less spoilage and fewer labor hours than expected. d
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