Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

SHIM & Fairfield Corporation manufactures a labor-intensive product. The cost standards developed by SHIM & Fairfield appear below. Manufacturing overhead at SHIM & Fairfield is

SHIM & Fairfield Corporation manufactures a labor-intensive product. The cost standards developed by SHIM & Fairfield appear below. Manufacturing overhead at SHIM & Fairfield is applied to production on the basis of standard direct labor-hours:

Standard Quantity Standard Cost per Standard cost per unit:

per unit: ounces or hour:

Direct Materials....... 0.75 ounces $20.00 $15.00

Direct Labor........... 1.2 hours $12.00 $14.40

Variable Overhead........ 1.2 hours $3.00 3.60

Fixed Overhead...... 1.2 hours $5.00 6.00

Total Standards Cost per Unit.... $39.00

The standards above were based on an expected annual volume of 8,000 units. The actual results for last year were as follows:

Number of Units Produced .... 8,200

Direct labor-hours incurred ..... 10,000

Ounces of direct materials purchased ..... 7,900

Ounces of direct materials used in production .......... 6,070

Total cost of direct materials purchased ....... $156,815

Total direct labor cost ...... $122,800

Total Variable overhead cost ...... $28,600

Total fixed manufacturing overhead cost .... $47,500


Required:

Compute the following variances for SHIM & Fairfield:
a. Compute the materials price variance, the materials quantity variance and total material variance.

b. Compute the labor rate variance, the labor efficiency variance and the total labor variance.

c. Compute the variable overhead rate variance, the variable overhead efficiency variance and the total variable overhead variance.

d. Discuss at least 2 advantages and 2 disadvantages of standard costing systems.

e. Compute the Fixed overhead budget variance and Fixed overhead volume variance.

Step by Step Solution

3.35 Rating (167 Votes )

There are 3 Steps involved in it

Step: 1

Solution for Option a Computation of materials price variance the materials quantity variance and to... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Tools for business decision making

Authors: kimmel, weygandt, kieso

4th Edition

978-0470117262, 9780470534786, 470117265, 470534788, 978-0470095461

More Books

Students also viewed these Accounting questions

Question

If ([x +])2 = 25, what are the possible inputs for x?

Answered: 1 week ago