Question
In: Accounting
Benson Company manufactures molded candles that are finished by hand. The company developed the following standards...
Benson Company manufactures molded candles that are finished by hand. The company developed the following standards for a new line of drip candles:
| Amount of direct materials per candle | 1.30 | pounds | |
| Price of direct materials per pound | $ | 0.60 | |
| Quantity of labor per unit | 0.80 | hours | |
| Price of direct labor per hour | $ | 9.00 | /hour |
| Total budgeted fixed overhead | $ | 107,100 | |
During 2017, Benson planned to produce 21,000 drip candles. Production lagged behind expectations, and it actually produced only 15,000 drip candles. At year-end, direct materials purchased and used amounted to 21,400 pounds at a unit price of $0.56 per pound. Direct labor costs were actually $8.40 per hour and 14,400 actual hours were worked to produce the drip candles. Overhead for the year actually amounted to $78,000. Overhead is applied to products using a predetermined overhead rate based on estimated units.
Required
-
a.&b. Compute the standard cost per candle for direct materials, direct labor, overhead and also the total standard cost for one drip candle.
-
c.&d. Compute the actual cost per candle for direct materials, direct labor, overhead and also the total actual cost per candle.
-
e. Compute the price and usage variances for direct materials and direct labor.
-
f. Compute the fixed cost spending and volume variances.
Solutions
Expert Solution
| Computation of standard cost per candle | ||||
| Particulars | Amount | Per Candle | ||
| (21000 units) | ||||
| Direct materials | $ 16,380.00 | $ 0.78 | ||
| (21000x1.3x.6) | ||||
| Direct labor | $ 151,200.00 | $ 7.20 | ||
| (21000x0.8x9) | ||||
| Prime cost | $ 167,580.00 | $ 7.98 | ||
| Fixed O.H | $ 107,100.00 | $ 5.10 | ||
| Total cost | $ 274,680.00 | $ 13.08 | ||
| Computation of actual cost per candle | ||||
| Particulars | Amount | Per Candle | ||
| (15000 units) | ||||
| Direct materials | $ 11,984.00 | $ 0.80 | ||
| (21400x0.56) | ||||
| Direct Labor | $ 120,960.00 | $ 8.06 | ||
| (14400x8.4) | ||||
| Prime cost | $ 132,944.00 | $ 8.86 | ||
| Fixed O.H | $ 78,000.00 | $ 5.20 | ||
| Total cost | $ 210,944.00 | $ 14.06 | ||
| Computation of price and usage variances | |||||
| Particulars | 15000 units | Variance | |||
| Actual | Standard | ||||
| Price | |||||
| Direct Materials | $ 11,984.00 | $ 11,700.00 | $ (284.00) | ||
| Direct Labor | $ 120,960.00 | $ 108,000.00 | $ (12,960.00) | ||
| Usage | |||||
| Direct Materials | 21400 pounds | 19500 pounds | 1900 pounds | in excess | |
| Direct Labor | 14400 hours | 12000 hours | 2400 hours | in excess | |
| Fixed Cost | $ 78,000.00 | $ 76,500.00 | $ (1,500.00) | ||
ekkarill92 answered 1 year agoRelated Solutions
Benson Company manufactures molded candles that are finished by hand. The company developed the following standards...
Benson Company manufactures molded candles that are finished by
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Price of direct materials per pound
$
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Quantity of labor per unit
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Price of direct labor per hour
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