Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Utease Corporation has many production plants across the midwestern United States. A newly opened plant, the Bellingham plant, produces and sells one product. The plant

Utease Corporation has many production plants across the midwestern United States. A newly opened plant, the Bellingham plant, produces and sells one product. The plant is treated, for responsibility accounting purposes, as a profit center. The unit standard costs for a production unit, with overhead applied based on direct labor hours, are as follows.

Manufacturing costs (per unit based on expected activity of 23,000 units or 57,500 direct labor hours):

Direct materials (3.0 pounds at $20) $ 60.00
Direct labor (2.5 hours at $90) 225.00
Variable overhead (2.5 hours at $30) 75.00
Fixed overhead (2.5 hours at $40) 100.00
Standard cost per unit $ 460.00
Budgeted selling and administrative costs:
Variable $ 10 per unit
Fixed $ 1,400,000

Expected sales activity: 19,000 units at $550 per unit

Desired ending inventories: 14% of sales

Assume this is the first year of operations for the Bellingham plant. During the year, the company had the following activity.

Units produced 22,000
Units sold 20,500
Unit selling price $ 545
Direct labor hours worked 54,500
Direct labor costs $ 4,959,500
Direct materials purchased 70,000 pounds
Direct materials costs $ 1,400,000
Direct materials used 70,000 pounds
Actual fixed overhead $ 1,200,000
Actual variable overhead $ 1,625,000
Actual selling and administrative costs $ 2,590,000

In addition, all over- or underapplied overhead and all product cost variances are adjusted to cost of goods sold.

Required:

d. Find the direct materials variances (materials price variance and quantity variance). (Indicate the effect of each variance by selecting Favorable, Unfavorable, and "None" for no effect (i.e., zero variance). Enter your answers in dollars not in pounds.)

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

Auditing And Assurance Services

Authors: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Chris E. Hogan

16th Global Edition

1292147989, 978-1292147987

More Books

Students also viewed these Accounting questions

Question

Describe the problems in the administration of disciplinary action.

Answered: 1 week ago

Question

Explain discipline and disciplinary action.

Answered: 1 week ago