Question
Waterways Corporation uses very stringent standard costs in evaluating its manufacturing efficiency. These standards are not ideal at this point, but the management is working
Waterways Corporation uses very stringent standard costs in evaluating its manufacturing efficiency. These standards are not ideal at this point, but the management is working toward that as a goal. At present, the company uses the following standards. Materials Item Per unit Cost Metal 1 lb. 63 per lb. Plastic 12 oz. $1.00 per lb. Rubber 4 oz. 88 per lb. Direct labor Item Per unit Cost Labor 15 min. $9.00 per hr. Predetermined overhead rate based on direct labor hours = $4.70 The January figures for purchasing, production, and labor are: The company purchased 218,100 pounds of raw materials in January at a cost of 78 a pound. Production used 218,100 pounds of raw materials to make 110,000 units in January. Direct labor spent 18 minutes on each product at a cost of $8.80 per hour. Overhead costs for January totaled $62,775 variable and $71,000 fixed. Answer the following questions about standard costs.
Answer these please:
Total Material Variance__$__________. Favorable or Unfavorable
Labor Price Variance $________. Favorable or Unfavorable
Labor Quantity Variance $_______. Favorable or Unfavorable
total Labor Variance $________. Favorable or Unfavorable
Total overhead variance $_______. Favorable or Unfavorable
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