COST ACCOUNTING

PLEASE SOLVE ALL

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 gallon is as follows: Direct material: 2 quarts of A $14 4 quarts of B 16

Direct labor: 2 hours 16 Manufacturing overhead 12 Total $58 The flexible budget system provides for $50,000 of fixed overhead at normal capacity of 10,000 direct labor hours. Variable overhead is projected at $1 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 quarts used B 20,000 quarts purchased at a cost of $3.90/quart; 19,800 quarts used Direct labor: 9,800 hours worked at a cost of $79,380 Overhead: Fixed $48,100 Variable 21,000 Total overhead $69,100 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 Total direct material $30