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Sweetwater Company manufactures two products, Mountain Mist and Valley Stream. The company prepares its master budget on the basis of standard costs. The following data
Sweetwater Company manufactures two products, Mountain Mist and Valley Stream. The company prepares its master budget on the basis of standard costs. The following data are for March.
Standards | Mountain Mist | Valley Stream | ||
Direct materials | 3 ounces at $14.80 per ounce | 4 ounces at $17.20 per ounce | ||
Direct labor | 5 hours at $60.20 per hour | 6 hours at $78 per hour | ||
Variable overhead (per direct labor-hour) | $48 | $53.20 | ||
Fixed overhead (per month) | $366,415 | $399,360 | ||
Expected activity (direct labor-hours) | 6,650 | 7,800 | ||
Actual results | ||||
Direct material (purchased and used) | 4,900 ounces at $14.20 per ounce | 4,700 ounces at $19.00 per ounce | ||
Direct labor | 5,080 hours at $62.50 per hour | 7,480 hours at $82.60 per hour | ||
Variable overhead | $270,550 | $396,510 | ||
Fixed overhead | $334,950 | $406,500 | ||
Units produced (actual) | 1,070 units | 1,220 units | ||
Required:
a. Prepare a variance analysis for each variable cost for each product. b. Prepare a fixed overhead variance analysis for each product.
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