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 $12,225 overall manufacturing cost variance is only 2% 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, 3.50 feet at $4.30 per foot $ 15.05 Direct labor, 2.2 direct labor-hours at $9 per direct labor-hour 19.80 Variable overhead, 2.2 direct labor-hours at $2.20 per direct labor-hour 4.84 Fixed overhead, 2.2 direct labor-hours at $4.50 per direct labor-hour 9.90 Standard cost per unit $ 49.59

Problem 10A-10 Comprehensive Standard Cost Variances [LO10-1, LO10-2, LO10-3, LO10-4] "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 $12,225 overall manufacturing cost variance is only 2% of the $1,536,000 standard cost of products made during the year. That's 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 Card-per Unit Direct materials, 3.50 feet at $4.30 per foot Direct labor, 2.2 direct labor-hours at $9 per direct labor-hour Variable overhead, 2.2 direct labor-hours at $2.20 per direct labor-hour Fixed overhead, 2.2 direct labor-hours at $4.50 per direct labor-hour $15.05 19.80 4.84 9.90 Standard cost per unit $ 49.59 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 69,000 feet of material was purchased during the year at a cost of $4.50 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 45,500 direct labor-hours during the year at a direct labor cost of $8.85 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) Budgeted fixed overhead costs Actual variable overhead costs incurred Actual fixed overhead costs incurred 40,000 $180,000 $ 113,750 $177,100