PIUtielll 1UA11 13.20 Direct materials, _3_ yards $_4.40_ per yard ........... Direct labor, _1_DLH ~ $12 per DLH... Variable manufacturing overhead, 1_DLH $5 per DLH*. Fixed manufacturing overhead, _1_DLH ~ $11.80 per DLH** Standard cost per unit ........ ........... 11.80 42.00 $___ *__DLHs = $___per * DLH $_ +_ DLHs = $_per ** DLH. 2. Materials variances: Materials price variance = _9600_ U Materials quantity variance = 2200__U Labor variances: Labor rate variance = _5800_ Labor efficiency variance = _2400___F 0 A B C D E F G H I J K L M N O P (II) Actual DLHs of Input, at the Actual Rate Actual DLHs of Input, at the Standard Rate Standard DLHS Allowed for Output, at the Standard Rate (SH ~ SR) (AH AR) (AH ~ SR) DLHs DLHS x $ x $_ DIH_Per per DLH_Der VOH Rate Variance, F/U F/U VOH Efficiency Var., $ F/U B C DEF G H I J K L M N O P Spending Variance, $ F/U Fixed overhead variances: Actual Fixed Budgeted Fixed Overhead Overhead Buag Fixed Overhead Applied to Work in Process _DLHs x $ per DLH = $. Budget Variance, Volume Variance, F/U F/U PROBLEM 10A-11 Comprehensive Standard Cost Variances (L010-1, L010-2, L010-3, L010-4) Flandro Company uses a standard cost system and sets predetermined overhead rates on the basis of direct labor-hours. The following data are taken from the company's budget for the current year: Denominator activity (direct labor-hours) ... Variable manufacturing overhead cost Fixed manufacturing overhead cost... 5,000 $25,000 $59,000 The standard cost card for the company's only product is given below: Direct materials, 3 yards at $4.40 per yard ............... Direct labor, 1 hour at $12 per hour.. Manufacturing overhead, 140% of direct labor cost......... Standard cost per unit ..... $13.20 12.00 16.80 $42.00 Chapter 10 During the year, the company produced 6,000 units of product and incurred the following costs: Materials purchased, 24,000 yards at $4.80 per yard ..... Materials used in production (in yards) ....... Direct labor cost incurred, 5,800 hours at $13 per hour Variable manufacturing overhead cost incurred ..... Fixed manufacturing overhead cost incurred ............ $115,200 18,500 $75,400 $29,580 $60,400 Required: 1. Redo the standard cost card in a clearer, more usable format by detailing the variable and fixed overhead cost elements. Prepare an analysis of the variances for direct materials and direct labor for the year 3. Prepare an analysis of the variances for variable and fixed overhead for the year. What effect, if any, does the choice of a denominator activity level have on unit standard costs? Is the volume variance a controllable variance from a spending point of view? Explain
