Wonderful Not only did our salespeople do a good job in meeting the sales budget this year, but our production people did a good job in controlling costs as well, said Kim Clark, president of Martell Company Our $22,400 overall manufacturing cost variance is only 3 of the $1,536,000 standard cost of products made during the year Thats well within the 3 parameter set by management for acceptable variances It looks like everyone will be in line for a bonus this year The company produces and sells a single product The standard cost card for the product follows Standard Cost Cardper Unit Direct materials, 4 50 feet at $4 60 per foot $ 20 70 Direct labor, 2 6 direct labor hours at $16 per direct labor hour 41 60 Variable overhead, 2 6 direct labor hours at $1 70 per direct labor hour 4 42 Fixed overhead, 2 6 direct labor hours at $8 00 per direct labor hour 20 80 Standard cost per unit $ 87 52 The following additional information is available for the year just completed a The company manufactured 20,000 units of product during the year b A total of 88,000 feet of material was purchased during the year at a cost of $4 70 per foot All of this material was used to manufacture the 20,000 units There were no beginning or ending inventories for the year c The company worked 55,000 direct labor hours during the year at a direct labor cost of $15 70 per hour d Overhead is applied to products on the basis of standard direct labor hours Data relating to manufacturing overhead costs follow Denominator activity level (direct labor hours) 50,000 Budgeted fixed overhead costs $ 400,000 Actual variable overhead costs incurred $ 99,000 Actual fixed overhead costs incurred $ 396,700 Required 1 Compute the materials price and quantity variances for the year (Input all amounts as positive values Indicate the effect of each variance by selecting F for favorable, U for unfavorable, and None for no effect (i e, zero variance) ) Materials price variance Materials quantity variance 2 Compute the labor rate and efficiency variances for the year (Input all amounts as positive values Indicate the effect of each variance by selecting F for favorable, U for unfavorable, and None for no effect (i ee, zero variance) Labor rate variance Labor efficiency variance

Question

Wonderful  Not only did our salespeople do a good job in meeting the sales budget this year, but our production people did a good job in controlling costs as well, said Kim Clark, president of Martell Company  Our $22,400 overall manufacturing cost variance is only 3  of the $1,536,000 standard cost of products made during the year  Thats well within the 3  parameter set by management for acceptable variances  It looks like everyone will be in line for a bonus this year  The company produces and sells a single product  The standard cost card for the product follows  Standard Cost Cardper Unit Direct materials, 4 50 feet at $4 60 per foot $ 20 70 Direct labor, 2 6 direct labor hours at $16 per direct labor hour 41 60 Variable overhead, 2 6 direct labor hours at $1 70 per direct labor hour 4 42 Fixed overhead, 2 6 direct labor hours at $8 00 per direct labor hour 20 80 Standard cost per unit $ 87 52 The following additional information is available for the year just completed  a  The company manufactured 20,000 units of product during the year  b  A total of 88,000 feet of material was purchased during the year at a cost of $4 70 per foot  All of this material was used to manufacture the 20,000 units  There were no beginning or ending inventories for the year  c  The company worked 55,000 direct labor hours during the year at a direct labor cost of $15 70 per hour  d  Overhead is applied to products on the basis of standard direct labor hours  Data relating to manufacturing overhead costs follow  Denominator activity level (direct labor hours) 50,000 Budgeted fixed overhead costs $ 400,000 Actual variable overhead costs incurred $ 99,000 Actual fixed overhead costs incurred $ 396,700 Required  1  Compute the materials price and quantity variances for the year  (Input all amounts as positive values  Indicate the effect of each variance by selecting  F  for favorable,  U  for unfavorable, and  None  for no effect (i e, zero variance) ) Materials price variance Materials quantity variance 2  Compute the labor rate and efficiency variances for the year  (Input all amounts as positive values  Indicate the effect of each variance by selecting  F  for favorable,  U  for unfavorable, and  None  for no effect (i ee, zero variance)  Labor rate variance Labor efficiency variance

Accepted Answer

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Standard Cost Cardper Unit
Direct materials, 4.50 feet at $4.60 per foot	$	20.70
Direct labor, 2.6 direct labor-hours at $16 per direct labor-hour		41.60
Variable overhead, 2.6 direct labor-hours at $1.70 per direct labor-hour		4.42
Fixed overhead, 2.6 direct labor-hours at $8.00 per direct labor-hour		20.80

Standard cost per unit	$	87.52

Question

Wonderful! Not only did our salespeople do a good job in meeting the sales budget this year, but our production people did a good job

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Denominator activity level (direct labor-hours)		50,000
Budgeted fixed overhead costs	$	400,000
Actual variable overhead costs incurred	$	99,000
Actual fixed overhead costs incurred	$	396,700