Question
In: Accounting
J&W Corporation manufactures a new electronic game console. The current standard cost sheet for a game...
J&W Corporation manufactures a new electronic game console. The current standard cost sheet for a game console follows.
| Direct materials, ? kilograms at $6 per kilogram | $ | ? | per game |
| Direct labor, 0.75 hours at ? per hour | ? | per game | |
| Overhead, 0.75 hours at ? per hour | ? | per game | |
| Total costs | $ | 36 | per game |
Assume that the following data appeared in J&W’s records at the end of the past month.
| Actual production | 47,000 | units | |
| Actual sales | 44,000 | units | |
| Materials (113,500 kilograms) | ? | ||
| Materials price variance | 40,000 | U | |
| Materials efficiency variance | 32,400 | U | |
| Direct labor price variance | 10,200 | U | |
| Direct labor (34,000 hours) | 561,000 | ||
| Underapplied overhead (total) | 18,100 | U | |
There are no materials inventories.
Required:
a-1. Complete the standard cost sheet for a
game console given below.
a-2. Prepare a variance analysis for direct
materials and direct labor.
b. Assume that all production overhead is fixed
and that the $18,100 underapplied is the only overhead variance
that can be computed. What are the actual and applied overhead
amounts?
Solutions
Expert Solution
A-1 standard cost sheet
| Direct material | 2.8 kgs | at $6 per gram | $16.8 per game(2.8*$6) | |||
| Direct labor | 0.75 hours | at $16.2 per hour | $12.15 per game($16.2*0.75) | |||
| Overhead | 0.75 hours | at $9.4 per hour(7.05/0.75) | $7.05 | |||
| Total cost | $36 |
1.Material efficiency variance = SR (SQ-AQ)
-32,400 =$6 (SQ-113,500)
-32,400/6=SQ-113,500
SQ=108,100 kgs
2.Standard quantity per unit = Standard quantity/ actual production
108,100/47,000
=2.3 kgs per unit
3.Actual labor rate
labor price variance =AH (SR-AR)
-10,200=(34,000*SR )-$561,000
SR=$16.2 per hour
4. Overhead cost = total cost-labor-material
=$36-$16.8-12.15
=$7.05
A-2
variance analysis
| Direct material | ||||
| Price variance | $40,000 | U | ||
| efficiency variance | $32,400 | U | ||
| Direct Labor | ||||
| Price variance | $10,200 | U | ||
| Efficiency variance | $20,250 | F | ||
Labor efficiency variance = SR(SH-AH)
$16.2(47,000 units*0.75 hour per unit)-34,000
=20,250 Favorable (As the actual hours are less than budgeted hours for actual output the variance is favorabel)
B
Applied overhead =Actual quantity*Standard cost per unit
47,000*$7.05
=$331,350
As the overhead is underapplied, actual overhead > applied overhead.
Actual OH = applied OH+$18,100
=$331,350+$18,100
=$349,450
ekkarill92 answered 2 years agoRelated Solutions
J&W Corporation manufactures a new electronic game console. The current standard cost sheet for a game...
J&W Corporation manufactures a new electronic game console.
The current standard cost sheet for a game console follows:
Direct materials, ? kilograms at $6 per kilogram
$
?
per game
Direct labor, 0.75 hours at ? per hour
?
per game
Overhead, 0.75 hours at ? per hour
?
per game
Total costs
$
42
per game
Assume that the following data appeared in J&W’s records at
the end of the past month:
Actual production
46,000
units
Actual sales
43,000...
J&W Corporation manufactures a new electronic game console. The current standard cost sheet for a game...
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manufactures a new electronic game console. The current standard
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Direct materials, ? kilograms at $6 per kilogram
$
?
per game
Direct labor,
0.75 hours at ? per hour
?
per game
Overhead, 0.75
hours at ? per hour
?
per game
Total costs
$
39
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J&W Corporation manufactures a new electronic game console. The current standard cost sheet for a game...
J&W Corporation manufactures a new electronic game console.
The current standard cost sheet for a game console follows:
Direct materials, ?
kilograms at $6 per kilogram
$
?
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Direct labor, 0.75 hours at ?
per hour
?
per game
Overhead, 0.75 hours at ? per
hour
?
per game
Total costs
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