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In: Accounting

Wolverine Inc. had the following standards for their production of a specialty desk designed to work...

Wolverine Inc. had the following standards for their production of a specialty desk designed to work with laptops, tablets and smartphones. The standards are based on 500,000 labor hours.

Materials:6 lbs. @ $5 per lb.Labor: 10 hrs.@ $7 per hr.Fixed OH:$500,000Variable OH:$5 per DL hr

Fixed OH was calculated based on an estimated production level of 250,000 hours.

During the month of March, the following occurred:

Production:30,000

Materials Purchased:200,000 lbs @ $5.15 per lb.

Materials Used160,000 lbs

Direct Labor320,000 hrs @ $6.80 per hr

Fixed OH$512,000

StandardBudgetedActualUnits25,00030,00030,000Fixed Overhead$ 500,000$ 500,000$ 512,000Variable Overhead$1,250,000*$1,500,000**$1,450,000Total Overhead$1,750,000$2,000,000$1,962,000The 250,000 standard units was found by taking the 250,000 expected hours to be worked and dividing by the 10 hours per unit to arrive at estimated or standard production of 25,000 units.Predetermined overhead application rate is $7 per DL hour found by taking the $5 var cost per DL hour + $2 fixed cost per DL hour.*$5 per hr x 10 hrs per unit x 25,000 units**$5 per hr x 10 hrs per unit x 30,000 units

Find:

1. Standard Cost

2. Materials Price Variance

3. Materials Usage Variance

4. Total Materials Variance

5. Labor Rate Variance

6. Labor Efficiency Variance

7. Total Labor Variance

8. Overhead Budget Variance

9. Overhead Volume Variance

10. Total Overhead Variance

Expert Solution

As per policy, only 4 parts of a question is allowed to answer at a time, so answering 1-7 to cover Mat & Lab. part:

1) Standard cost =std material + std. labor + std. overhead cost = 65+107+fixed o/h $2+variable o/h10*5=$152 per unit


2) MPV = (Actual price - Standard price)* Actual mate used = (5.15 - 5)160000 = $24000U


3) MUV= (Std mat. For actual production - actual usage) * Std. price = (300006 - 160000)5 = $100000F


4)TMV=MPV+MUV=$24000U+$100000F=$76000F


5)LRV=(Actual rate - Std. rate)*actual hours used = (6.80-7)320000=$64000F


6) LEV= (Std Lab hours For actual production - actual hours) * Std. rate = (3000010 - 320000)5 = $100000U


7)TLV=LRV+LEV=$64000U+$100000F=$36000F

ekkarill92 answered 1 year ago

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