Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Koontz Company manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May.

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

Koontz Company manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May. Standard Cost per Unit Actual Cost per Unit $ 6.84 $ 7.40 14.70 Direct materials: Standard: 1.90 feet at $3.60 per foot Actual: 1.85 feet at $4.00 per foot Direct labor: Standard: 1.05 hours at $14.00 per hour Actual: 1.10 hours at $13.50 per hour Variable overhead: Standard: 1.05 hours at $7.00 per hour Actual: 1.10 hours at $6.60 per hour Total cost per unit Excess of actual cost over standard cost per unit 14.85 7.35 7.26 $ 28.89 $ 29.51 $0.62 The production superintendent was pleased when he saw this report and commented: This $0.62 excess cost is well within the 4 percent limit management has set for acceptable variances. It's obvious that there's not much to worry about with this product." Actual production for the month was 16,500 units. Variable overhead cost is assigned to products on the basis of direct labor-hours. There were no beginning or ending inventories of materials. Required: 1. Compute the following variances for May: a. Materials price and quantity variances. b. Labor rate and efficiency variances. c. Variable overhead rate and efficiency variances. 2. How much of the $0.62 excess unit cost is traceable to each of the variances computed in (1) above. 3. How much of the $0.62 excess unit cost is traceable to apparent inefficient use of labor time? How much of the $0.62 excess unit cost is traceable to each of the variances computed in (1) above. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Round your answers to 2 decimal places.) 0.00 U Materials: Price variance Quantity variance Labor Rate variance Efficiency variance Variable overhead: Rate variance Efficiency variance Excess of actual over standard cost per unit U 0.00U 0.00 F 0.000 How much of the $0.62 excess unit cost is traceable to apparent inefficient use of labor time? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations. Round your final answers to 2 decimal places.) Excess of actual over standard cost per unit Less portion attributable to labor inefficiency: Labor efficiency variance Variable overhead efficiency variance Portion due to other variances 0.00 0.00 $

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

Auditing Quality Management Systems Keeping Your Quality Management System Relevant

Authors: Herne European Consultancy, Ray Tricker

1st Edition

0992758521, 978-0992758523

More Books

Students also viewed these Accounting questions

Question

What is the equation for burning C3H8 with 300% excess air?

Answered: 1 week ago

Question

to encourage a drive for change by developing new ideas;

Answered: 1 week ago

Question

4 What are the alternatives to the competences approach?

Answered: 1 week ago