Santas Workshop

Santas Workshop Company has established two monthly budgets. But there is some conflict as to which budget should be used. Santa believes the estimate should incorporate a longer range approach. The long-range approach would have an average of 13,440 direct labor expected to be used the next year. The head elf insists on using a short range approach and change capacity based on monthly estimate. The estimate for the month in question is 1,360 direct labor hours. Since Santa believes he is in charge, he tells the accounting department to use his approach for the budgeted hours. The two budgets are as follows:

Product Direct Labor Total Budgeted

Units Hours Overhead

700 1,120 $15,346

850 1,360 $16,714

Standard cost per unit:

Material (2.5 pounds @ $3.70 per lb.) $ 9.25

Labor (1.6 hours@$9.75 per hr) $15.60

Overhead (1.6 hours @ ???) ??????

Analysis of the actual factory data show the following (none has been recorded):

Production:

Beginning units in process (30% complete conversion) 20 units

Transferred to finished goods 625 units

Ending units in process (65% complete conversion) 40 units

Material used during the month 1,710 pounds

Material purchased during the month 2,200 pounds costing $8,250

Labor used 1,132 hours costing $11,321

Variable Factory overhead $6,839

Fixed factory overhead $8,796

Santas workshop uses the FIFO method

Required:

1. Find the amount transferred to finished goods.

2. Find the material quantity and price variance.

3. Find the labor efficiency and rate variance

4. Find the factory overhead variances (four variance method)

5. Make the required journal entries

THIS IS ALL THE INFORMATION I WAS GIVEN FOR THE ASSIGNMENT