Question
The Ebonie Manufacturing Company's costing system has two direct cost categories: direct materials and direct manufacturing labour. Manufacturing overhead (both variable and fixed) is allocated
The Ebonie Manufacturing Company's costing system has two direct cost categories: direct materials and direct manufacturing labour. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of standard direct manufacturing labour-hours (DLH). At the beginning of 2022/2023, Ebonie adopted the following standards for its manufacturing costs: Standards Direct Materials Direct Manufacturing Labour Manufacturing Overhead Variable Fixed 3.00 5.00 kg at hrs at Input $ 5.00 $ 15.00 per kg per hr Cost per Output Unit $ 15.00 $ 75.00 $ 30.00 $ 40.00 $ 160.00 $ 6.00 perDLH $ 8.00 perDLH Standard Manufacturing Cost per Unit The denominator level for total manufacturing overhead per month in 2022/2023 is 40,000 direct manufacturing labour-hours. Ebonie Manufacturing's flexible budget for January 2023 was based on this denominator level. The records for January indicated the following: Actual Costs Direct Materials Purchased Direct Materials Used Required 25,000.00 23,100.00 kg $ 5.20 $ 14.60 $ 600,000.00 per kg per hr kg 40,100.00 Actual Production 7,800.00 Output Units Direct Manufacturing Labour Total Actual Manufacturing Overhead (Variable & Fixed) Hours 1 a schedule of total standard manufacturing costs for the 7800 output units in January. [2 marks] 2 For the month of January 2023, calculate the following variances, indicating whether each is favourable (F) or unfavourable (U), in good format with workings: a Direct materials price variance, based on purchases b Direct materials efficiency variance c Direct manufacturing labour price variance d Direct manufacturing labour efficiency variance e Total manufacturing overhead spending variance f Variable manufacturing overhead efficiency variance g Production-volume variance.
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