Question Help Root manufactures coffee mugs that it sells to other companies for customizing with their own logos Root 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 59.700 coffee mugs per month m (Click the icon to view the cost data) Actual cost and production information for July 2018 follows (Click the icon to view actual cost and production information) Read the reduirements Requirement 1. Compute the cost and efficiency variances for direct materials and direct laber Begin with the cost variances Select the required formules 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 AD acha quantity. FOH= foed overhead, SC = standard cost, SQ = standard quality Formula Valance Direct materials cost variance AQS0 SC 1286 Direct labor cost variance (ACSC) KAD 7167 Choose to any ist or enter any number input rats and then click check Aisne 12 Darts remaining Clear pute the cost riances. Seled orable (U). A $ 0.05 0.39 Direct Materials (0.2 lbs @ $0.25 per lb) Direct Labor (3 minutes @ $0.13 per minute) Manufacturing Overhead Variable 13 minutes @ $0.06 per minute) Fixed (3 minutes @ 50 15 per minute) Total Cost per Coffee Mug ntify whether each variance is cost. SO standard quantity variance $ 0.18 0.45 0.63 ance $ 1.07 Print Done e the co aces. Se sle (0) a. There were no beginning or ending inventory balances. All expenditures were on account b. Actual production and sales were 62.400 coffee mugs. C. Actual direct materials usage was 10,000 lbs at an actual cost of $0.17 perib d. Actual direct labor usage was 203.000 minutes at a total cost of $30.450 e. Actual overhead cost was $10,150 variable and $30 750 fixed f. Selling and administrative costs were $115.000 fy whether SL SQ SEE ance bute the cost a slances Selec orable (U) Ab 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 fixed 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 Journalize the adjusting of the Manufacturing Overhead account 5. Root intentionally hired more highly skilled workers during July. How did this decision affect the cost variances? Overall, was the decision wise? entify whether each variance is cose Se=slandard quanh variance an
