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 1.2 ounces @$1.00 per ounce) |
Direct materials (packaging 1 package piece @$0.40 per package piece) |
Direct labor (.20 hour @ $17.00 per hour) |
Variable overhead ($2.00 per direct labor hour) |
Fixed overhead ($9.00 per direct labor hour) |
During the most recent month, 88,000 finished packages of the product were produced. Other salient information follows:
Actual variable overhead | $35,750.00 |
Actual fixed overhead | $161,400.00 |
Actual direct labor hours | 17,400 |
Actual direct labor hourly rate | $17.05 |
DM chemicals purchase price | $0.980 |
DM chemicals purchase quantity | 115,000 |
DM packages purchase price | $0.41 |
DM packages purchase quantity | 94,000 |
DM chemicals used | 110,000 |
DM packages used | 92,000 |
Fixed Overhead Budget | $162,000 |
For questions 27-30 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. DM= direct materials, DL= direct labor.
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| Dollar Amount | F | U |
27. | The DL rate variance |
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28. | The DL efficiency variance |
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29. | The variable overhead spending variance |
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30. | The fixed overhead spending variance |
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31. If the fixed overhead is applied based on a rate of $9.00 per direct labor hour, then what is the budgeted fixed overhead base (also called the denominator) quantified in terms of finished packages?
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