McKnight prepares flexible 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: @ $ 0.25 per Ib) ( 0.2 lbs Direct Materials 0.05 $ 0.10 per minute) ( 3 minutes @ Direct Labor 0.30 Manufacturing Overhead: ( 3 minutes @ $ 0.18 Variable 0.06 per minute) $ 0.42 0.60 0.14 per minute) 3 minutes@ Fixed $ 0.95 Total Cost per Coffee Mug EA There were no beginning ending inventory balances. All expenditures were on . or account. Actual production and sales were 62,600 coffee mugs. b. Actual direct materials usage was 10,000 lbs. at an actual cost of $0.17 per lb. C. Actual direct labor usage was 199,000 minutes at a total cost of $23,880. d. Actual overhead cost was $8,955 variable and $31,445 fixed. . Selling and administrative costs were $131,000 f. Variance Direct materials cost variance 800 F $ Direct labor cost variance 3,980 U Variance = $ Direct materials efficiency variance 630 F = $ Direct labor efficiency variance 1,120 U Variance VOH cost variance 2,985 F VOH efficiency variance 672 U Variance = $ FOH cost variance 6,287 U FOH volume variance 1,134 F II II II Accounts and Explanation Date Debit Credit Raw Materials Inventory Jul. 2,500 Direct Materials Cost Variance 800 Accounts Payable 1,700 Purchased direct materials. Work-in-Process Inventory Jul. 3,130 Direct Materials Efficiency Variance 630 Raw Materials Inventory 2,500 Used direct materials Work-in-Process Inventory Jul. 18,780 Direct Labor Cost Variance 3,980 Direct Labor Efficiency Variance 1,120 Wages Payable 23,880 Direct labor costs incurred Manufacturing Overhead Jul. 40,400 McKnight manufactures coffee mugs that it sells (Click the icon to view the cost data, McKnight calculated the following variances and recorded the following entries for July 2018 other companies for customizing with their own logos. (Click the icon to view variances.) Actual cost and production information for July 2018 follows: Click the icon to view journal entries.) Click the icon to view actual cost and production information.) McKnight's standard and actual sales price per mug is $8. pa and/or an Enter all othor Umbe parentheses to enter any contra McKnight Standard Cost Income Statement For the Month Ended July 31, 2018 Gross Profit Operating Income (Loss)
