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Genuine Spice Inc. began operations on January 1 of the current year. The company produces eight- ounce bottles of hand and body lotion called Eternal

Genuine Spice Inc. began operations on January 1 of the current year. The company produces eight- ounce bottles of hand and body lotion called Eternal Beauty. The lotion is sold wholesale in 12-bottle cases for $100 per case. There is a selling commission of $20 per case. The January direct materials, direct labor, and factory overhead costs are as follows:

DIRECT MATERIALS
Cost Behavior Units per Case Cost per Unit Cost per Case
Cream base Variable 100 oz. $0.02 $ 2.00
Natural oils Variable 30 oz. 0.30 9.00
Bottle (8-oz.) Variable 12 bottles 0.50 6.00
$17.00
DIRECT LABOR
Department Cost Behavior Time per Case Labor Rate per Hour Cost per Case
Mixing Variable 20 min. $18.00 $6.00
Filling Variable 5 14.40 1.20
25 min. $7.20
FACTORY OVERHEAD
Cost Behavior Total Cost
Utilities Mixed $600
Facility lease Fixed 14,000
Equipment depreciation Fixed 4,300
Supplies Fixed 660
$19,560

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Part CAugust Variance Analysis

During September of the current year, the controller was asked to perform variance analyses for August. The January operating data provided the standard prices, rates, times, and quantities per case. There were 1,500 actual cases produced during August, which was 250 more cases than planned at the beginning of the month. Actual data for August were as follows:

Actual Direct Materials

Price per Unit

Quantity per Case

Cream base $0.016 per oz. 102 oz.
Natural oils $0.32 per oz. 31 oz.
Bottle (8-oz.) $0.42 per bottle 12.5 bottles

Actual Direct

Actual Direct Labor

Labor Rate

Time per Case

Mixing $18.20 19.50 min.
Filling 14.00 5.60 min.
Actual variable overhead $305.00
Normal volume 1,600 cases

The prices of the materials were different from standard due to fluctuations in market prices. The standard quantity of materials used per case was an ideal standard. The Mixing Department used a higher grade labor classification during the month, thus causing the actual labor rate to exceed standard. The Filling Department used a lower grade labor classification during the month, thus causing the actual labor rate to be less than standard

Required-Part C:
11. Determine and interpret the direct labor rate and time variances for the two departments. Round hours to the nearest tenth of an hour.

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Text Version of the question:

11. Determine and interpret the direct labor rate and time variances for the two departments. Round hours to the nearest tenth of an hour. Enter a favorable variance as a negative amount, and an unfavorable variance as a positive amount.

Direct Labor Rate Variance
Mixing Department Filling Department
Difference
X
Direct labor rate variance
Direct Labor Time Variance
Mixing Department Filling Department
Difference
X
Direct labor time variance

The change in the caused the labor rate variances. This change have been responsible for the direct labor time variance.

11. Determine and interpret the direct labor rate and time variances for the two departments. Round hours to the nearest tenth of an hour. Enter a favorable variance as a negative amount, and an unfavorable variance as a positive amount Direct Labor Rate Variance Mixing Department Filling Department Difference Direct labor rate variance Direct Labor Time Variance Mixing Department Filling Department Difference Direct labor time variance The change in the caused the labor rate variances. This change have been responsible for the direct labor time variance

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