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In: Accounting

Mark Ludwig, LLC manufactures drum sticks. During April 2018 the company produced 40,000 matched pairs of...

Mark Ludwig, LLC manufactures drum sticks. During April 2018 the company produced 40,000 matched pairs of hickory drum sticks. The following information was available for the month. All material purchased in April was used in April production.

Standard per Pair of Drum Sticks

Actual

Direct materials (hickory)

0.5 board feet @ $3.00 per board foot

$90,000 for 18,000 board feet

Direct labor

1.5 hours @ $10.00 per hour

$660,000 for 55,000 hours

Variable manufacturing overhead

1.5 hours @ $4.00 per direct labor hour

$220,000

Fixed manufacturing overhead

$131,250 for budgeted volume of 50,000 pairs of drum sticks and 75,000 hours, or $1.75 per hour

$100,000

Required

a. Calculate the direct materials price variance for April. Label the variance as favorable or unfavorable.

b. Calculate the direct materials quantity variance for April. Label the variance as favorable or unfavorable.

c. Calculate the direct labor rate variance for April. Label the variance as favorable or unfavorable.

d. Calculate the direct labor efficiency variance for April. Label the variance as favorable or unfavorable.

e. Calculate the variable overhead spending variance for April. Label the variance as favorable or unfavorable.

f. Calculate the variable overhead efficiency variance for April. Label the variance as favorable or unfavorable.

g. Calculate the fixed overhead spending variance for April. Label the variance as favorable or unfavorable.

h. Calculate the overhead production volume variance for April. Label the variance as favorable or unfavorable.

i. Due to a shortage of hickory, the company had to pay a premium in order to acquire the hickory needed for April production. Discuss the impact of this decision on the variances experienced in April.

Solutions

Expert Solution

If Co. Had to pay premium for accqurng hickory then it will increase purchase price of hickory. It will effect mat. price variance I.e. increase the mat. price variance(unfavorable).

ekkarill92 answered 1 year ago
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