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Return to question Item 3 Flandro Company uses a standard cost system and sets its predetermined overhead rate on the basis of direct labor-hours. The

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Item 3

Flandro Company uses a standard cost system and sets its predetermined overhead rate on the basis of direct labor-hours. The following data are taken from the companys planning budget for the current year:

Denominator activity (direct labor-hours) 9,000
Variable manufacturing overhead cost $ 29,250
Fixed manufacturing overhead cost $ 96,750

The standard cost card for the companys only product is given below:

Inputs (1) Standard Quantity or Hours (2) Standard Price or Rate Standard Cost (1) (2)
Direct materials 4 yards $ 2.05 per yard $ 8.20
Direct labor 2 hours $ 10.00 per hour 20.00
Manufacturing overhead 2 hours $ 14.00 per hour 28.00
Total standard cost per unit $ 56.20

During the year, the company produced 4,680 units of product and incurred the following actual results:

Materials purchased, 29,700 yards at $2.00 per yard $ 59,400
Materials used in production (in yards) 19,300
Direct labor cost incurred, 10,000 hours at $8.15 per hour $ 81,500
Variable manufacturing overhead cost incurred $ 31,000
Fixed manufacturing overhead cost incurred $ 63,500

Required:

1. Create a new standard cost card that separates the variable manufacturing overhead per unit and the fixed manufacturing overhead per unit.

2. Compute the materials price and quantity variances. Also, compute the labor rate and efficiency variances.

3. Compute the variable overhead rate and efficiency variances. Also, compute the fixed overhead budget and volume variances.

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