ne of the owners of Nerdzy Computer Company had a midlife crisis and decided to leave the business and start manufacturing soap instead of computers (sound far-fetched well this is what my stepmom really did). The soap company is called Sudsy Days and it manufactures white labeled soap that it sells to other companies for customizing with their own logos. Sudsy Days prepares flexible budgets and uses a standard cost system to control manufacturing costs.

Flexible Budgets & Standard Cost Systems One of the owners of Nerdzy Computer Company had a midlife crisis and decided to leave the business and start manufacturing soap instead of computers (sound far-fetched... well this is what my stepmom really did). The soap company is called Sudsy Days and it manufactures white labeled soap that it sells to other companies for customizing with their own logos. Sudsy Days prepares flexible budgets and uses a standard cost system to control manufacturing costs. The standard unit cost of a jar of soap is based on static budget volume of 59800 soap jugs per month: Direct Materials (0.2 lbs. @ $0.25 per 1b.) $0.05 Direct Labor (3 minutes @ $0.11 per minute) 0.33 Manufacturing Overhead: Variable (3 minutes @ $0.06 per minute) 0.18 Fixed (3 minutes @ $0.13 per minute) 0.39 0.57 Total Cost per Soap Jug $0.95 a. Actual cost and production information for July 2021 follows: There were no beginning or ending inventory balances. All expenditures were on account. b. Actual production and sales were 62500 soap jugs. Actual direct materials usage was 11000 lbs. at an actual cost of $0.17 per lb. d. Actual direct labor usage was 197000 minutes at a total cost of $25610. Actual overhead cost was $10835 variable and S29765 fixed. f. Selling and administrative costs were $95000. c. e. 2 3 REQUIREMENTS 1 Compute the cost and efficiency variances for direct materials and direct labor. Journalize the purchase and usage of direct materials and the assignment of direct labor, including the related variances For manufacturing overhead, compute the variable overhead cost and efficiency variances and the fixed overhead cost and volume variances. Journalize the actual manufacturing overhead and the allocated manufacturing overhead. Journalize the movement of all production costs from Work-in-Process Inventory. Journalize the adjusting of the Manufacturing Overhead account. 5 Sudsy Days intentionally hired more highly skilled workers during July. How did this decision affect the cost variances? Overall, was the decision wise? 6 Prepare the standard cost income statement for July. The standard and actual sales price per jug of soap is $3. 4 M N K VLLITICIENCY wanance Formula: Varlance: Bud FOH AL FOH 1,045 Reg2 Journalize the purchase and usage of direct materials and the assignment of direct labor Including the related variances. DR CR 3,125 Account & Explanation Work in Process Inventory Direct Materials Cost Variance Direct Materials Efficiency Variance Purchased Direct Materials 880 375 1,870 20,625 3,940 Accounts Payable Work In Process Inventory Direct Labor Cost Variance Used Direct serials Direct Labor Efficiency Variance Wages Payable 1,045 25,610 Direct Labor Costs incurred Req3 For manufacturing overhead, compute the variable overhead cost and efficiency variances and the fixed overhead cost and volume variances YOH Cost Variance Formula Variance Act. VOH - (SC AQ) 985 VOH Efficiency Variance Formula Variance Act. VOH - (SCAQ 570 FOH Cost Variance Formula Variance Bud FOH AH FOH 6,443 u FOH Volume Variance Formula Varance Act. FOH-Bud POH 1,0531 Reg Journ the actual manufacturing overhead and the located facturing bourhood all the movement of all production costs from Work in Process tory Journalisthening of the Manufacturing Overhad account M N O q Req 4 Joumalize the actual manufacturing overhead and the allocated manufacturing overhead. Journalize the movement of all production costs from Work-In-Process Inventory. Journalize the adjusting of the Manufacturing Overhead account. Account & Explanation DR CR Various Accounts Manufacturing overhead costs incurred. Manufacturing overhead costs allocated IN Completed Goods transferred To ad Req5 How did this Accounts Payable Accounts Receivable Additional Paid In Capital Bonds Payable Cash Sudsy Day Common Stock decision Cost of Goods Sold Direct Labor Cost Variance Direct Labor Efficiency Variance Direct Materials Cost Variance Direct Materials Efficiency Variance Direct Materials Inventory Reg Prepare the standard cost income statement for uly the standard and actual sales price per cap 53 Suchy Days Standard Cost Income statement For the month eded luly 31, 2023 SCOA + Req5 Sudsy Days intentionally hired more highly skilled workers during July. How did this decision affect the cost variances? Overall, was the decision wise