In: Accounting
I need an answers for those following question after one hour please with explanation
Sebastian Company, which manufactures electrical switches, uses a standard cost system and carries all inventories at standard. The standard manufacturing overhead costs per switch are based on direct labor hours and are shown below:
Variable overhead (5 hours @ $12 per direct manufacturing labor hour) Fixed overhead (5 hours @ $15* per direct manufacturing labor hour)
Total overhead per switch
*Based on capacity of 200,000 direct manufacturing labor hours per
month.
The following information is available for the month of December:
$ 60 75
$135
46,000 switches were produced although 40,000 switches were scheduled to be produced.
225,000 direct manufacturing labor hours were worked at a total cost of $5,625,000.
Variable manufacturing overhead costs were $2,750,000.
Fixed manufacturing overhead costs were $3,050,000.
•
The variable overhead spending variance for December was
a. $50,000 U. b. $350,000 U. c. $10,000 F. d. $60,000 F.
The variable manufacturing overhead efficiency variance for
December was
a. $50,000 U. b. $350,000 U. c. $10,000 F. d. $60,000 F.
3. what is the direct labor price variance?
a. 21,000 favorable b. 21,000 unfavorable c. 17,250 unfavorable d.
20,700 unfavorable
The following information is available for the Gabriel Products Company for the month of July:
______________________________________________Static Budget______Actual
Units__________________________________________5,000____________5,100
Sales Revenue__________________________________$60,000__________$58,650 Variable manufacturing costs_______________________$15,000__________$16,320
Fixed manufacturing costs_________________________$18,000__________$17,000
Variable marketing and administrative expense_________$10,000__________$10,500
Fixed marketing and administrative expense___________$12,000__________$11,000
The total sales-volume variance for the month of July would be:
a. $2,550 unfavorable b. $1,350 unfavorablec. $700
favorable
d. $100 favorable
5,100 – 5,000 = 100 units × $7* = $700F Unit CM = 60,000 – 15,000
Solution:
Problem 1
Part 1 --- Overhead Spending Variance = Actual Variable Overhead Cost – Standard Variable Overhead Cost
= $2,750,000 – (225,000 Hours worked x Std VOH Rate $12)
= 2,750,000 - $2,700,000
= $50,000 Unfavorable
The correct option is a. $50,000 U
Part 2 ---
Std Hours Allowed for actual production= Actual Production 46,000 Watches x 5 hours needed per unit = 230,000 Hours
Variable Manufacturing Efficiency Variance = Std VOH Rate (Actual Hours Worked – Std Hours Allowed for actual production)
= $12 (225,000 – 230,000)
= $60,000 Favorable since actual hours worked is less than standard
The correct option is d. $60,000 F
Part 3 – Direct Labor Price Variance
Direct Labor Price Variance = Actual hours worked (Actual Rate – Standard Rate)
Or
Actual Hour x Actual Rate - Actual Hour x Std Rate
= $5,625,000 – (225,000 Hours x Std Rate per hour)
In this question standard rate per labor hour is missing. Hence direct labor price variance cannot be calculated. Please advise the same.
Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you
Pls ask separate question for remaining parts