Question
The SCC Division of the Big-Drug Company uses standard costing to help control their production costs. The divisions main product is a pharmaceutical product that
The SCC Division of the Big-Drug Company uses standard costing to help control their production costs. The divisions main product is a pharmaceutical product that comes in a multi-dose package. The standard variable costs per package are given below: Direct materials (chemical ingredients 2.5 ounces @ $1.80 per ounce) Direct materials (packaging 1 package piece @ $2.25 per package piece) Direct labor (0.20 hour @ $25.00 per hour) Variable overhead ($5.00 per direct labor hour) Fixed overhead ($5.00 per direct labor hour) During the most recent month, 70,000 packages of the product were produced. Other salient information related to the production of the 70,000 packages follows: Actual variable overhead $68,400.0 0 Actual fixed overhead $79,800.0 0 Actual direct labor hours 14,050 Actual direct labor hourly rate $24.95 DM chemicals purchase price $1.81 DM chemicals purchase quantity 180,000 DM packages purchase price $2.23 DM packages purchase quantity 70,100 DM chemicals used 177,000 DM packages used 70,100 Fixed Overhead Budget $80,000 Required:
For questions 17-25 compute each of the following variances indicating both the dollar amount and whether the amount is favorable (F) or unfavorable (U). If a variance is zero, please input zero for the dollar amount and leave the F and U columns blank. Dollar Amount F U 17. DM chemical purchase price variance 18. DM chemical efficiency (quantity) variance 19. DM packaging purchase price variance 20 DM packaging efficiency (quantity) variance 21 Direct Labor rate variance 22 Direct Labor efficiency variance 23 The variable overhead spending variance 24, The variable overhead efficiency variance 25 The fixed overhead spending variance Extra credit: What is the denominator in hours?
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