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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
"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 $ overall manufacturing cost variance is only
of the $ standard cost of products made during the year. That's well within the 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 with a standard cost card as follows:
The following additional information is available for the year just completed:
a The company manufactured units during the year.
b A total of feet of material was purchased during the year at a cost of $ per foot. All of this material was used to
manufacture the units produced. There were no beginning or ending inventories.
c The company worked direct laborhours at a direct labor cost of $ per hour.
d Overhead is applied to products based on standard direct laborhours. Data relating to manufacturing overhead costs follow:
Required:
Compute the materials price and quantity variances.
Compute the labor rate and efficiency variances.
For manufacturing overhead compute:
a The variable overhead rate and efficiency variances.
b The fixed overhead budget and volume variances.
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