COST ACCOUNTING AND CONTROL

Pest Away Company manufactures a product effective in controlling beetles. The company uses a standard cost system and a flexible budget. Standard cost of a galon is as follows: Direct material: 2 quarts of A $14 4 quarts of 16 Total direct material 530 Direct labor 2 hours Manufacturing overhead 12 Total The flexible budget system provides for $50,000 of fried overhead at nomal capacity of 10,000 direct labor hours. Variable overhead is projected at $per direct labor hour. Actual results for the period indicated the following Production: 5.000 gallons Direct material A 12.000 quarts purchased at a cost of $7.20/quart: 10.500 20.000 quarts purchased at a cost of $3.90/quart: 19.800 quarts used Direct labor9,800 hours worked at a cost of $79,380 Overhead Fored $48,100 Variable 21.000 Told overhead 19.10 Required: 1. What is the application rate per direct labor hour, the total overhead cost equation, the standard quantity for each material, and the standard hours? 2. Compute the following variances: a. Total material price variance b. Total material quantity variance C. Labor rate variance d. Labor efficiency variance e. MOH volume variance f. MOH efficiency variance g. MOH spending variance, both fixed and variable Leigh Manufacturers produces three products from a common manufacturing process. The total joint cost of producing 2,000 pounds of Product A; 1,000 pounds of Product B; and 1,000 pounds of Product C is $7,500. Selling price per pound of the three products are $15 for Product A; $10 for Product B; and $5 for Product C. Joint cost is allocated using the sales value method. Required: a. Compute the unit cost of Product A if all three products are main products. b. Compute the unit cost of Product A if Products A and B are main products and Product C is a by-product for which the cost reduction method is used. Pest Away Company manufactures a product effective in controlling beetles. The company uses a standard cost system and a flexible budget. Standard cost of a galon is as follows: Direct material: 2 quarts of A $14 4 quarts of 16 Total direct material 530 Direct labor 2 hours Manufacturing overhead 12 Total The flexible budget system provides for $50,000 of fried overhead at nomal capacity of 10,000 direct labor hours. Variable overhead is projected at $per direct labor hour. Actual results for the period indicated the following Production: 5.000 gallons Direct material A 12.000 quarts purchased at a cost of $7.20/quart: 10.500 20.000 quarts purchased at a cost of $3.90/quart: 19.800 quarts used Direct labor9,800 hours worked at a cost of $79,380 Overhead Fored $48,100 Variable 21.000 Told overhead 19.10 Required: 1. What is the application rate per direct labor hour, the total overhead cost equation, the standard quantity for each material, and the standard hours? 2. Compute the following variances: a. Total material price variance b. Total material quantity variance C. Labor rate variance d. Labor efficiency variance e. MOH volume variance f. MOH efficiency variance g. MOH spending variance, both fixed and variable Leigh Manufacturers produces three products from a common manufacturing process. The total joint cost of producing 2,000 pounds of Product A; 1,000 pounds of Product B; and 1,000 pounds of Product C is $7,500. Selling price per pound of the three products are $15 for Product A; $10 for Product B; and $5 for Product C. Joint cost is allocated using the sales value method. Required: a. Compute the unit cost of Product A if all three products are main products. b. Compute the unit cost of Product A if Products A and B are main products and Product C is a by-product for which the cost reduction method is used