Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The L Company produces one product whose standard cost for the year 20x3 was as follows: Direct materials $40.00 Direct labour 40.00 Manufacturing overhead 23.75

The L Company produces one product whose standard cost for the year 20x3 was as follows:

Direct materials $40.00

Direct labour 40.00

Manufacturing overhead 23.75

$103.75

Direct materials are purchased at $8 per Kg and each unit required about 5kg, Direct Labour requires 2.5 hours at $16 per hour. Manufacturing Overhead is applied on the basis of Direct Labour hours. Each unit requires 2.5 Direct labour hours at a rate of 9.5

The denominator level of activity is 40,000 hours and the total budgeted fixed overhead is $180,000. The budgeted selling price of the product is $145.

At the end of 20x3, the following actual results are produced by the accounting department:

Units produced and sold 18,000

Selling price $155

Direct labour hours 39,750

The total direct labour cost is $606,187.50

Direct materials purchased 110,000 kg

Average cost of direct materials purchased $9.35

Variable overhead $106,000

Fixed overhead $175,000

Direct material used 88,750kg

Required -

a. Prepare a Flex budget financial statement with the information above (6 marks)

b.Calculate the following cost variances:

i. direct materials price and quantity variance (4 marks)

ii. direct labour rate and efficiency variance (4 marks)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

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

Horngrens Cost Accounting A Managerial Emphasis

Authors: Srikant M. Datar, Madhav V. Rajan

17th Edition

0135628474, 9780135628478

More Books

Students also viewed these Accounting questions

Question

What is an access vector?

Answered: 1 week ago

Question

What is your role within these groups?

Answered: 1 week ago