Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Hearty Company produces a standing desk that is very useful for people with back pain. The company uses a standard cost system to help the

Hearty Company produces a standing desk that is very useful for people with back pain. The company uses a standard cost system to help the control of costs. According to thestandardsthat have been set for the desks, the factory should work 780 direct labor-hours each month and produce 3,900 desks.

Atstandard, each desk should require 3.1 yards of material at $6.40 per yard.

Thestandardcosts associated with this level of production are as follows:

Total

Per Unit of Product

Direct materials

$

77,376

$ 19.84

Direct labor

$

12,090

3.10

Variable manufacturing overhead (based on direct labor-hours)

$

3,120

0.80

$ 23.74

During April, the factoryactuallyworked only 750 direct labor-hours and produced 4,000 desks. The followingactualcosts were recorded during the month:

Total

Per Unit of Product

Direct materials (13,600 yards)

$

81,600

$ 20.40

Direct labor

$

13,200

3.30

Variable manufacturing overhead

$

6,800

1.70

$ 25.40

All of the materials purchased during the month were used in production.

Required:

  1. Calculate the Material Quantity Variance and state whether it is Favorable (F) or Unfavorable (U). Show your workings
  2. Calculate the Material Price Variance and state whether it is Favorable (F) or Unfavorable (U.) Show your workings
  3. Calculate the Labor Rate Variance and state whether it is Favorable (F) or Unfavorable (U.) Show your workings
  4. Calculate the Labor Efficiency Variance and state whether it is Favorable (F) or Unfavorable (U.) Show your workings

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Understanding Corporate Annual Reports

Authors: William Pasewark

7th Edition

0073526932, 9780073526935

More Books

Students also viewed these Accounting questions

Question

1. What does this mean for me?

Answered: 1 week ago