Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed
image text in transcribed
"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 $34,400 overall manufacturing cost variance is only 1.0% of the $3.440.000 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: (1) X2) Standard Standard Standard Quantity Price Cost Inputs or Hours or Rate (1) (2) Direct materials 4.50 feet $ 3.80 per foot $ 17.10 Direct labor 1.7 hours $ 11 per hour 18.70 Variable overhead 1.7 hours $ 2.50 per hour 4.25 Fixed overhead 1.7 hours $ 5.50 per hour Total standard cost per unit $49.40 9.35 The following additional Information is available for the year just completed: a. The company manufactured 15,000 units of product during the year. b. A total of 65,000 feet of material was purchased during the year at a cost of $4.00 per foot. All of this material was used to manufacture the 15,000 units produced. There were no beginning or ending Inventories for the year. The company worked 28.000 direct labor-hours during the year at a direct labor cost of $10.70 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) Budgeted fixed overhead costs Actual variable overhead costs incurred Actual fixed overhead costs incurred 23,000 $ 126,500 $ 72,800 $ 124,800 Required: 1. Compute the materials price and quantity variances for the year. 2. Compute the labor rate and efficiency variances for the year. 3. For manufacturing overhead compute: a. The variable overhead rate and efficiency variances for the year. b. The fixed overhead budget and volume variances for the year. (For all requirements, indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (l.e., zero variance). Input all amounts as positive values.) None U 1 Matenals price variance Matenais quantity variance 2 Labor rate variance Labor officiency vanance 3a Variable overhead tato variance Vanable ovutoad etficiency variance 3 Fixed overhead budget variance Fotod overhead volume variance

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing Jane Doe

Authors: Michelle Cornish

1st Edition

1777418828, 978-1777418823

More Books

Students also viewed these Accounting questions