Question
Walton Company manufactures molded candles that are finished by hand. The company developed the following standards for a new line of drip candles: Amount of
Walton Company manufactures molded candles that are finished by hand. The company developed the following standards for a new line of drip candles:
Amount of direct materials per candle | 1.70 | pounds | |
Price of direct materials per pound | $ | 0.60 | |
Quantity of labor per unit | 0.90 | hours | |
Price of direct labor per hour | $ | 7.10 | /hour |
Total budgeted fixed overhead | $ | 182,400 | |
During 2017, Walton planned to produce 32,000 drip candles. Production lagged behind expectations, and it actually produced only 25,000 drip candles. At year-end, direct materials purchased and used amounted to 43,900 pounds at a unit price of $0.56 per pound. Direct labor costs were actually $6.40 per hour and 24,900 actual hours were worked to produce the drip candles. Overhead for the year actually amounted to $150,000. Overhead is applied to products using a predetermined overhead rate based on estimated units.
Required
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a.&b. Compute the standard cost per candle for direct materials, direct labor, overhead and also the total standard cost for one drip candle.
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c.&d. Compute the actual cost per candle for direct materials, direct labor, overhead and also the total actual cost per candle.
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e. Compute the price and usage variances for direct materials and direct labor.
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f. Compute the fixed cost spending and volume variances.
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