Question

diesel co. produces a one product, and the company was disappointed to see gross profit fell short of budget by a large amount when sales were on buget. They have provided the following production information in hopes of learning what areas need improvement.

The standard cost card for the one single product that is sold is as follows:

	Standard quantity or hours		Standard Price or Rate		Standard Cost
Direct Materials	2 meters		$8.45		$16.90
Direct Labour	1.4 hours		$8.00		$11.20
Variable Overhead	1.4 hours		$2.50		$ 3.50
Fixed Overhead	1.4 hours		$6.00		$ 8.40
			Total standard cost per unit		$40.00

The following information is available for the year just ended:

1. A total of 65,000 meters of material was purchased @ $8.55 per meter. Of that, 1,000 meters remained in ending inventory.
2. The company worked 45,000 direct labour hours during the year at a cost of $7.80 per hour.
3. The company manufactured 30,000 units during the year.
4. The denominator activity level was 35,000 direct labour hours.
5. Budgeted annual fixed overhead costs were $210,000.
6. Actual variable overhead costs incurred were $108,000.
7. Actual fixed overhead costs incurred were $211,800.

Provide

Fixed Overhead Budget and volume v

Varibale overhead spending and eficeny var.

direct labor rate and efficiency var.

materials price and q var.

the company purchasd a new dirct mat. for last yr. shuld they cont. using new mat?

Answer 1