In: Accounting
Sweetwater Company manufactures two products, Mountain Mist and Valley Stream. The company prepares its master budget on the basis of standard costs. The following data are for March:
Standards | Mountain Mist | Valley Stream | ||
Direct materials | 3 ounces at $14.90 per ounce | 4 ounces at $16.60 per ounce | ||
Direct labor | 5 hours at $60.10 per hour | 6 hours at $76 per hour | ||
Variable overhead (per direct labor-hour) | $48 | $52.60 | ||
Fixed overhead (per month) | $342,225 | $398,580 | ||
Expected activity (direct labor-hours) | 5,850 | 7,800 | ||
Actual results | ||||
Direct material (purchased and used) | 3,200 ounces at $13.60 per ounce | 4,800 ounces at $17.50 per ounce | ||
Direct labor | 4,910 hours at $61.00 per hour | 7,410 hours at $77.50 per hour | ||
Variable overhead | $245,550 | $379,510 | ||
Fixed overhead | $314,950 | $397,000 | ||
Units produced (actual) | 1,010 units | 1,210 units | ||
Required:
a. Compute a variance analysis for each variable cost for each product. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)
MOUNTIAN | MIST | VALLEY | STREAM | |
PRICE VARIANCE | EFFECIENCY VARIANCE | PRICE VARIANCE | EFFECIENCY VARIANCE | |
DRECT MATERIALS | 4160F | 2533U | 4320UU | ????? |
DIRECT LABOR | 4419U | 8414F | 11115 | ????? |
VARIABLE OVERHEAD | ????? | ????? | ????? | ?????? |
b. Compute a fixed overhead variance analysis for each product. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)
MONTIAN | MIST | VALLEY | STREAM | |
PRICE VARIANCE | PRODUCTION VOLUME VARIANCE | PRICE VARIANCE | PRODUCTION VOLUME VARIANCE | |
FIXED OVERHEAD | 27275F | 46800U | 1580F | 27594U |