McKnight manufactures coffee mugs that it sells to other companies for customizing with their own logos Mcknight prepares flecible budgets and uses a standard cost system to control manufacturing costs. The standard unit cost of a coffee mug is based on static budget volume of 59.900 coffee mugs per month (Click the icon to view the cool data) Actual cost and production information for July 2010 follows: (Click the icon to view actual cost and production information.) Read the requirements > Requirement 1. Compute the cost and efficiency variances for direct materials and direct labor Begin with the cost variances Select the required formulas, compute the cost variances for direct materials and direct labor and identify whether each variance is favorable (F) or unfavorable (U). (Abbreviations used: AC - actual cost; AQ - actual quantity FOHfixed overhead SC - standard cost SQ - standard quantity) Formula Variance Data table Direct materials cast variance Direct labor cost varlance = Direct Materials (0.2 lbs @50 25 per lb) $ 0.05 Direct Labor (3 minutes 30.13 per minute) 0.39 Manufacturing Overhead: Variable (3 minutes $0.06 per minute) $ 0.18 Fixed (3 minutes 50.14 per minute) 0.42 0 60 Total Cost per Coffee Mug $ 1.04 - X Requirements 1. Compute the cost and efficiency variances for direct materials and direct labor 2. Journalize the purchase and usage of direct materials and the assignment of direct labor including the related variances 3. For manufacturing overhead, compute the variable overhead cost and efficiency variances and the fored overhead cost and volume variances 4. Journalize the actual manufacturing overhead and the allocated manufacturing overhead. Journalize the movement of all production costs from Work-in-Process Inventory Joumalize the adjusting of the Manufacturing Overhead account 5. Mcknight Intentionally hired more highly skilled workers during July. How did this decision affect the cost variancas? Overall, was the decision wisa? More info a. There were no beginning or ending inventory balances. All expenditures were on account b. Actual production and sales were 62,600 coffee mugs Actual direct material usage was 10 000 lbs at an actual cost of $0 17 perib d. Actual direct labor usage was 199.000 minutes at a total cost of $29.850 e. Actual overhead cost was $9.950 variable and 530 550 fixed. f. Selling and administrative costs were $122,000 Print Done