CoursHeroTranscribedText: CASE: Standard Costing and variance analysis: "Wonderill Not only did our salespeople do a good job in meeting the sales budget this year, but our production people did a good job in controlling costs as well," said Kim Clark president of l't-{artell Company- "Gur $18,300 overall manucturing cost variance is only 1-2% of the $1,536,000 standard cost of products made during the year- That's well within the 3% parameter set by management for acceptable variances. It looks like everyone will be in line for a bonus this year." The company produces and sells a single product. The stande cost card for the product follows: Standard Cost Cardjer Unit of Product Direct materials, 2 feet at $8-45 per foot ___________________________________ $16.90 Direct labor, 1-4 direct labor hours at $16 per direct laborhour ___________________ 22-40 Variable overhead, 1.4 direct laborhours at $2-50 per direct laborhour . . . . - - - - - 3.50 Fixed overhead, 1.4 direct laborhours at $6 per direct laborhour ___________________ 3.40 Standard cost per unit __________________________________________________ $51.20 The following additional information is available for the year just completed: a. The company manufactured 30,000 units of product dining the year. b. A total of 64,000 feet of material was purchased during the year at a cost of $3.55 per foot. All of this material was used to manufacture the 30,000 units. There were no beginning or ending inventories for the year. c- The company worked 43,500 direct laborhours during the year at a direct labor cost of $15.80 per hour. d. Overhead is applied to products on the basis of standard direct laborhours. Data relating to manucturing overhead costs follow: Denominator activity level (direct laborhours) ________________________________ 35,000 Budgeted xed overhead costs (om the overhead exible budget] ____________ $210,000 Actual variable overhead costs incurred ___________________________________ $108,000 Actual xed overhead costs incurred ____________________________________ $211,300 Required: 1. Compute the direct materials price and quantity variances for the year. 2. Compute the direct labor rate and efciency varianoes for the year. 3. For manufacturing overhead compute: a. The variable overhead rate and efciency variances for the year. it. The xed overhead budget and volume variances for the year. 4. Total the variances you have computed, and compare the net amount with the $13,300 mentioned by the president. Do you agree that bonuses should be given to everyone for good cost control during the year? Explain