Smith manufactures coffee mugs that it sells to other companies for customizing with their own logos. Smith 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 60,000 coffee mugs per month:

Requirements

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. Smith intentionally hired more highly skilled workers during July. How did this decision affect the cost variances? Overall, was the decision wise?

Smith manufactures coffee mugs that it sells to other companies for customizing with their own logos. Smith 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 60,000 coffee mugs per month Actual cost and production information for July 2024 follows. (Click the icon to view actual cost and production information.) (Click the icon to view the cost data.) Read the requirements. Data table More info a. There were no beginning or ending inventory balances. All expenditures were on account. b. Actual production and sales were 62,700 coffee mugs. c. Actual direct materials usage was 10,000lbs. at an actual cost of $0.17 per lb. d. Actual direct labor usage was 200,000 minutes at a total cost of $30,000. e. Actual overhead cost was $10,000 variable and $30,500 fixed. f. Selling and administrative costs were $123,000. Requirements 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. Smith intentionally hired more highly skilled workers during July. How did this decision affect the cost variances? Overall, was the decision wise? Requirement 1. Compute the cost and efficiency variances for direct materials and direct labor. Begin with the cost variances. Select the required formulas, 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; AQ= actual quantity; FOH= fixed overhead; SC= standard cost, SQ= standard quantity.) Select the required formulas, compute the efficiency variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U). (Abbreviations used: AC= actual cost; AQ= actual quantity, FOH= fixed overhead, SC= standard cost, SQ= standard quantity. Requirement 2. Journalize the purchase and usage of direct materials and the assignment of direct labor, including the related variances. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Begin by journalizing the purchase of direct materials, including the related variance. (Prepare a single compound journal entry.) Journalize the incurrance and assignment of direct labor costs, including the related variances. (Prepare a single compound joumal entry.) Journalize the incurrance and assignment of direct labor costs, including the related variances. (Prepare a single compound journal entry.) Requirement 3 . For manufacturing overhead, compute the variable overhead cost and efficiency variances and the fixed overhead cost and volume variances. Requirement 3. For manufacturing overhead, compute the variable overhead cost and efficiency variances and the fixed overhead cost and volume variances. Begin with the variable overhead cost and efficiency variances. Select the required formulas, compute the variable overhead cost and efficiency variances, and identify whether each variance is favorable (F) or unfavorable (U). (Round any interim calculations to four decimal places, X.XXXX, and your final answers to the nearest whole dolllar. Abbreviations used. AC= actual cost; AQ= actual quantity. FOH= fixed overhead, SC= standard cost, SQ= standard quantity, VOH= variable overhead.) Now compute the fixed overhead cost and volume variances. Select the required formulas, compute the fixed overhead cost and volume variances, and identify whether each variance is favorable (F) or unfavorable (U). (Abbreviations used AC= actual cost AQ= actual quantity ;FOH= fixed overhead, SC= standard cost, SQ= standard quantity.) Requirement 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. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Begin by journalizing the entry to show the actual manufacturing overhead costs incurred. Journalize the applied manufacturing overhead Journalize the applied manufacturing overhead. Journalize the movement of all production from Work-in-Process Inventory. Journalize the movement of all production from Work-in-Process Inventory. Journalize the adjusting of the Manufacturing Overhead account. (Prepare a single compound jour Journalize the adjusting of the Manufacturing Overhead account. (Prepare a single compound journal entry.) Requirement 5 . Smith intentionally hired more highly skilled workers during July. How did this decision affect the Requirement 5. Smith intentionally hired more highly skilled workers during July. How did this decision affect the cost variances? Overall, was the decision wise? Hiring more-skilled, higher-paid labor led to direct labor cost variance. Given the labor efficiency variance, it The overall net effect is