Question

Flexible Budget, Standard Cost Variances, T-Accounts

Ingles Company manufactures external hard drives. At the beginning of the period, the following plans for production and costs were revealed:

Units to be produced and sold	25,000
Standard cost per unit:
Direct materials	$ 10
Direct labor	8
Variable overhead	4
Fixed overhead	3
Total unit cost	$ 25

During the year, 24,800 units were produced and sold. The following actual costs were incurred:

Direct materials	$263,872
Direct labor	204,352
Variable overhead	107,310
Fixed overhead	73,908

There were no beginning or ending inventories of direct materials. The direct materials price variance was $9,672 unfavorable. In producing the 24,800 units, a total of 12,772 hours were worked, 3 percent more hours than the standard allowed for the actual output. Overhead costs are applied to production using direct labor hours.

Required:

Instructions for parts 1 and 2: If a variance is zero, enter "0" and select "Not applicable" from the drop down box.

1. Prepare a performance report comparing expected costs to actual costs.

Ingles Company Performance Report
Cost Items	Actual Costs	Budgeted Costs	Variance	Direction
Direct materials	$	$	$
Direct labor
Variable overhead
Fixed overhead
	$	$	$

2. Determine the following. If a variance amount is zero, enter "0" and select "Not applicable" from the drop-down list.

a. Direct materials usage variance
$

b. Direct labor rate variance
$

c. Direct labor usage variance
$

d. Fixed overhead spending and volume variances

Spending variance	$
Volume variance	$

e. Variable overhead spending and efficiency variances

Variable overhead spending variance	$
Variable overhead efficiency variance	$

Answer 1