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Granison Corporation applies overhead on the basis of direct labor hours. Budgeted production for the period was set at 10,000 units. Total manufacturing overhead is
Granison Corporation applies overhead on the basis of direct labor hours. Budgeted production for the period was set at 10,000 units. Total manufacturing overhead is budgeted at $1,600,000, of which 60% is fixed. The following material and labor standard costs were developed for the only product of Granison Corporation: | |||||
Standards | |||||
Quantity | Cost | ||||
Materials | 4 Feet | $14 per foot | |||
Direct Labor | 8 Hours | $10 per hour | |||
The following information is available regarding the company's actual operations for the period: | |||||
Actuals | |||||
Units produced | 11,000 | ||||
Materials purchased | 52,000 Feet | $13.70 per foot | |||
Materials used | 52,000 Feet | ||||
Direct Labor | 84,000 Hours | $840,000 | |||
Manufacturing overhead: | |||||
Variable | $756,000 | ||||
Fixed | $1,000,000 |
Required | |||||
A. Calculate the following variances: | |||||
1. Materials price variance | |||||
2. Materials efficiency | |||||
3. Labor rate variance | |||||
4. Labor efficiency variance | |||||
5. Variable overhead spending variance | |||||
6. Variable overhead spending variance | |||||
7. Fixed overhead spending variance | |||||
8. Fixed overhead volume variance | |||||
B. Prepare the journal entry that is needed to record the purchase of raw materials at the standard price, and the related variance. | |||||
C. Prepare the journal entry that is needed to record the transfer of raw materials to production at standard usage rates, and the related quantity variance. | |||||
D. Prepare the journal entry that is needed to record the increase in work in process for the standard direct labor costs, and record the related rate and efficiency variances. | |||||
E. Prepare journal entries to apply factory overhead to production, and record the related variances |
Worksheet for Part A
Materials variances: | ||
Actual Material Cost | ||
Actual quantity | ||
Actual price | ||
Actual cost of direct materials | ||
Standard Material Cost | ||
Output | ||
Standard quantity of input | ||
Standard quantity of input to achieve output | ||
Standard price per unit of input | ||
Standard cost of direct materials | ||
Total materials variance | ||
Materials price variance: | ||
Standard price | ||
Actual price | ||
Actual quantity | ||
Materials price variance | ||
Materials quantity variance: | ||
Standard quantity | ||
Actual quantity | ||
Standard price | ||
Materials quantity variance | ||
Labor variances: | ||
Actual Labor Cost | ||
Actual hours of labor | ||
Actual rate | ||
Actual cost of direct labor | ||
Standard Labor Cost | ||
Output | ||
Standard hours per unit | ||
Standard hours to achieve output | ||
Standard rate per hour | ||
Standard cost of direct labor | ||
Total labor variance | ||
Labor rate variance: | ||
Standard rate | ||
Actual rate | ||
Actual hours | ||
Labor efficiency variance: | ||
Standard hours | ||
Actual hours | ||
Standard rate | ||
Labor efficiency variance | ||
Overhead variances: | ||
Variable overhead variances | ||
Actual hours | ||
Actual cost of variable overhead | ||
Actual output | ||
Standard hours per unit | ||
Standard hours to achieve output | ||
Standard rate per hour | ||
Standard cost of variable overhead | ||
Actual use at standard cost | ||
Total variable overhead variance | ||
Variable overhead spending variance | ||
Variable overhead efficiency variance | ||
Fixed overhead variances | ||
Actual cost of fixed overhead | ||
Actual output | ||
Standard hours per unit | ||
Standard hours to achieve output | ||
Standard rate per hour | ||
Standard cost of fixed overhead | ||
Budgeted fixed overhead | ||
Total fixed overhead variance | ||
Fixed overhead spending variance | ||
Fixed overhead volume variance |
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