Question
I have tried and tried to figure out the materials price variance. Would you please help? Slick Corporation is a small producer of synthetic motor
I have tried and tried to figure out the materials price variance. Would you please help?
Slick Corporation is a small producer of synthetic motor oil. During May, the company produced 5,000 cases of lubricant. Each case contains 12 quarts of synthetic oil. To achieve this level of production, Slick purchased and used 16,500 gallons of direct materials at a cost of $20,919. It also incurred average direct labor costs of $14 per hour for the 3,987 hours worked in May by its production personnel. Manufacturing overhead for the month totaled $9,913, of which $2,200 was considered fixed. Slick's standard cost information for each case of synthetic motor oil is as follows.
Direct materials standard price$1.30per gallonStandard quantity allowed per case3.25gallonsDirect labor standard rate$16per hourStandard hours allowed per case0.75direct labor hoursFixed overhead budgeted$2,600per monthNormal level of production5,200cases per monthVariable overhead application rate$1.50per caseFixed overhead application rate ($2,600 5,200 cases)0.50per caseTotal overhead application rate$2.00per case
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started