Question

8-13 ) Required information

Use the following information for the Exercises below.

[The following information applies to the questions displayed below.]

Hart Company made 4,600 bookshelves using 31,000 board feet of wood costing $359,600. The company's direct materials standards for one bookshelf are 7 board feet of wood at $11.50 per board foot.

Exercise 8-13 Computation and interpretation of materials variances LO P2

(1) Compute the direct materials price and quantity variances incurred in manufacturing these bookshelves.

AQ = Actual Quantity
SQ = Standard Quantity
AP = Actual Price
SP = Standard Price
///////////////////////////////////////////////////////////////////////////////////////////////////////

Exercise 6-5 Absorption costing and variable costing income statements LO P2

Rey Company’s single product sells at a price of $222 per unit. Data for its single product for its first year of operations follow.

Direct materials	$	26	per unit
Direct labor	$	34	per unit
Overhead costs
Variable overhead	$	12	per unit
Fixed overhead per year	$	364,000	per year
Selling and administrative expenses
Variable	$	24	per unit
Fixed	$	212,000	per year
Units produced and sold		26,000	units

1. Prepare an income statement for the year using absorption costing
2. Prepare an income statement for the year using variable costing.

Answer 1