Question

In: Accounting

Standards (for a planned level of production of 2,200 units per month) Direct Materials: Yards per...

Standards (for a planned level of production of 2,200 units per month)

Direct Materials: Yards per costume12.50yards,, Price per yard $26.00average

Direct Labor: D.L. Hours per costume 62.00hours,, D.L. Rate per hour $44.50average

Variable MOH standard rate per direct labor hour $4.35per D.L. hour,,Fixed MOH standard rate per direct labor hour $9.47per D.L. hour,,Total Budgeted Fixed MOH (for 1 month) $ 1,250,000

Actual cost and data from the current month:

Actual number of yards of materials purchased 28,500

Actual cost of materials purchased $ 810,000 $28.42per yd

Actual number of yards used in production 27,350

Actual number of costumes produced 2,300

Actual direct labor hours 133,500

Actual direct labor cost $5,500,000 $41.20per hr

Actual variable MOH (in total) $665,000

Actual fixed MOH (in total) $1,488,000

Variable Manufacturing Overhead
Actual Actual Input Quantity Flexible
Cost Incurred x Budgeted (Std) Rate Budget (Applied) Allocated
  
Spending Variance Efficiency Varience
Flexible Budget (TOTAL) Variance

Green is unfavorable or favorable and yellow is the answer

Solutions

Expert Solution

Cost card for 2300 units
Particulars Standard cost for actual production Particulars Actual cost
Quantity & hour Rate($/yard & $/hr) Amount Quantity & hour Rate($/yard & $/hr) Amount
Direct Material 28750.00 26.00 $              747,500 Material purchased 28500 28.42 $                 810,000.00
(2300 units * 12.5 yard) Material used 27350 28.42 $                 777,315.79
Closing material 1150 $                    32,684.21
Direct labour 142600.00 44.50 $          6,345,700 Direct labour 133500 41.20 $              5,500,000.00
(2300 units * 62 hour) ($55.00,000/133500 hr)
Variable overhead 142600.00 4.35 $              620,310 Variable overhead 133500 4.98 $                 665,000.00
(2300 units * 62 hour) ($665,000/133500 hr)
Fixed overhead $          1,250,000 Fixed overhead $              1,488,000.00
Total Standard manufacturing cost $          8,963,510
Budgeted unit                       2,200
Actual unit                       2,300
A Computation of variances:
1 Material Price variance = (Standard rate - Actual rate) * Actual quantity purchase
Material Price variance = ( $26 - $28.42 ) * 28,500 yards = -$69,000 (Unfavorable)
2 Material efficiency variance = (Standard Quantity - Actual Quantity used) * Standard rate
Material efficiency variance = (28,750 yards-27,350 yards) * $26.00 = $36,400 (Favorable)
3 Labor Rate variance = (Standard rate - Actual rate) * Actual hours
Labor Rate variance = ( $44.50/hr-$41.20/hr ) * 133500 hr = $440,750 (favorable)
4 Labor efficiency variance = (Standard Hours - Actual Hours) * Standard rate
Labor efficiency variance = (142600 hr-133500 hr) *$44.50/hr = $404,950 (Favorable)
5 Variable Overhead rate variance = (Standard rate - Actual rate) * Actual hour used
Variable Overhead rate variance = ( $4.35/hr-$4.98/hr ) *133500 hr = -$84,275 (unfavorable)
6 Variable overhead efficiency variance = (Standard hour - Actual hour) * Standard rate
Variable overhead efficiency variance = (142600 hr-133500 hr) * $4.35/hr = $39,585 (Favorable)
7 Fixed Overhead Budget variance = (Actual Fixed overhead - Budgeted Fixed overhead
Fixed Overhead Budget variance = ($14,88,000 - $12,50,000)= -$2,38,000 (Unfavourable)
8 Fixed overhead Volume variance = (Actual output - Budgeted output) * Budgeted Overhead rate
Fixed overhead Volume variance = (2300 qty- 2200 qty) * ($12,50,000/2200 qty)= $56,818(favorable)
B Total variance:
Variances Favourable/
(Unfavourable)
MRV $                                  (69,000)
MEV $                                    36,400
LRV $                                  440,750
LEV $                                  404,950
VORV $                                  (84,275)
VOEV $                                    39,585
FOBV $                               (238,000)
FOVV $                                    56,818
Net favourable/(unfavourable) variance $                                  587,228
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ekkarill92 answered 2 years ago
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