Question

Owen limited uses a standard costing system. The standard cost card for one product is shown below.

Direct material                  4kg @$5 per kg                                 20

Direct labour                      2 hour @ $8 per hour                     16

Variable overhead           2 hours @ $3.5 per hour               7

Total variable cost                                                                            43

Fixed overhead                 2 hours @ $7 per hour                   14

Total production cost                                                                     57

Standard selling price                                                                     70

Standard profit margin                                                                   13

The budgeted output and sales was 1000 units. Actual production and sales for the period were 1300 units.

Actual cost and revenue were as follows.

Direct material                  5000 kg costing                                 22,700

Direct labour                      2,850 hours costing                         21,500

Variable overhead                                                                           7,800

Fixed overhead                                                                                 14,600

Sales revenue                   1,300 units @ $68                            88,400

Required:

Calculate the following variances

1. Material usage and price
2. Labour efficiency and rate
3. Variable overheads efficiency and expenditure
4. Fixed overhead efficiency, capacity and expenditure
5. Sales price and sale volume

Answer 1

SQ

Standard Quantity(Kg) for actual output

5200

(4*1300)

AQ

Actual Quantity (Kg)of materials used

5,000

SP

Standard Price per Kg

$5.00

AP

Actual Price per Kg

$4.54

(22700/5000)

AQ*(AP-SP)

Direct Materials Price Variance

$2,300

Favorable

(Actual Price is LESS than Standard Price)

SP*(AQ-SQ)

Direct Materials Usage Variance

$1,000

Favorable

(Actual quantity is LESS than Standard quantity)

DIRECT LABOR VARIANCES

SH

Standard Labor hour for actual output

2600

(2*1300)

SR

Standard Labor rate per hour

$8.00

AH

Actual labor hour used

2850

AR

Actual Labor rate per hour

$7.54

($21500/2850)

AH*(AR-SR)

Direct labor Rate Variance

$1,300

Favorable

(Actual Rate is LESS than Standard Rate)

SR*(AH-SH)

Direct Labor Efficiency   Variance

$2,000

Unfavorable

(Actual hour is MORE than Standard hour)

VARIABLE OVERHEAD VARIANCES

SH

Standard Labor hour for actual output

2600

SR

Standard Overhead rate per hour

$3.50

AH

Actual labor hour used

2850

AR

Actual Overhead rate per hour

$2.74

(7800/2850)

5

AH*(AR-SR)

Variable Overhead Expenditure (Price) Variance

$2,175

Favorable

(Actual Rate is Less than Standard Rate)

6

SR*(AH-SH)

Varable Overhead Efficiency   Variance

$875

Favorable

(Actual hour is Less than Standard hour)

FIXED OVERHEAD VARIANCES

A

Budgeted Fixed Overhead

$14,000

B

Budgeted labor hour

2000

(2*1000)

C=A/B

Budgeted fixed overhead rate

$7

D

Standard Labor hour for actual output

2600

(2*1300)

E=C*D

Fixed overhead applied

$18,200

A-E

Fixed Overhead Volume Variance

$4,200

Unfavorable

F

Budgeted Fixed Overhead

$14,000

G

Actual Fixed Overhead

$14,600

H=F-G

Fixed OverheadSpending Variance

$600

Unfavorable

ekkarill92 Next > < Previous Related Solutions HalimSdnBhd uses a standard costing system. The standard cost card for one product is shown below:... HalimSdnBhd uses a standard costing system. The standard cost card for one product is shown below: Direct Material 4 kg at RM5 per kg                      RM 20 Direct Labor 2 hours at RM8 per hour 16 Variable Overhead 2 hours at RM 7.5 per hour15 Total Product Cost 51 The budgeted output and sales was 1,000 units. Actual output for the period was 1,300 units . Actual cost was as follows: Direct Material:                       5,000 kg, costing 22,750 Direct Labor:                      2,860 hours,... Wallis Company manufactures only one product and uses a standard cost system. The company uses a... Wallis Company manufactures only one product and uses a standard cost system. The company uses a predetermined plantwide overhead rate that relies on direct labor-hours as the allocation base. All of the company's manufacturing overhead costs are fixed—it does not incur any variable manufacturing overhead costs. The predetermined overhead rate is based on a cost formula that estimated $2,892,000 of fixed manufacturing overhead for an estimated allocation base of 289,200 direct labor-hours. Wallis does not maintain any beginning or ending... Phoenix Company manufactures only one product and uses a standard cost system. The company uses a... Phoenix Company manufactures only one product and uses a standard cost system. The company uses a plantwide predetermined overhead rate that relies on direct labor-hours as the allocation base. The predetermined overhead rate is based on a cost formula that estimated $2,887,200 of fixed and variable manufacturing overhead for an estimated allocation base of 240,600 direct labor-hours. Phoenix does not maintain any beginning or ending work in process inventory. The company’s beginning balance sheet is as follows: Phoenix Company Balance... Wallis Company manufactures only one product and uses a standard cost system. The company uses a... Wallis Company manufactures only one product and uses a standard cost system. The company uses a predetermined plantwide overhead rate that relies on direct labor-hours as the allocation base. All of the company's manufacturing overhead costs are fixed—it does not incur any variable manufacturing overhead costs. The predetermined overhead rate is based on a cost formula that estimated $2,886,000 of fixed manufacturing overhead for an estimated allocation base of 288,600 direct labor-hours. Wallis does not maintain any beginning or ending... The standard cost card for a product indicates that one unit of the product requires 8... The standard cost card for a product indicates that one unit of the product requires 8 kilograms of a raw material at $0.80 per kilogram. The production of the product in April was 870 units, but production had been budgeted for 850 units. During April, 7,150 kilograms of the raw material were purchased for $5,577. All the kilograms of the raw material purchased were used in production. What was the materials quantity variance? $152 F $152 U $280 F $280... Friar Inc produces one product and the company uses a standard cost system and determines that... Friar Inc produces one product and the company uses a standard cost system and determines that it should take one hour of direct labor to produce one unit. The normal production capacity is 150,000 units per year. The total budgeted overhead at normal capacity is 450,000 dollars comprised of 195,000 of variable costs and 255,000 of fixed costs. Overhead is applied on the basis of direct labor hours. During the current year, the company produced 156,000 units worked 160,000 direct... Edney Company employs a standard cost system for product costing. The per-unit standard cost of its... Edney Company employs a standard cost system for product costing. The per-unit standard cost of its product is: Raw materials $ 14.50 Direct labor (2 direct labor hours × $8.00 per hour) 16.00 Manufacturing overhead (2 direct labor hours × $11.00 per hour) 22.00 Total standard cost per unit $ 52.50 The manufacturing overhead rate is based on a normal capacity level of 600,000 direct labor hours. (Normal capacity is defined as the level of capacity needed to satisfy average... Edney Company employs a standard cost system for product costing. The per-unit standard cost of its... Edney Company employs a standard cost system for product costing. The per-unit standard cost of its product is: Raw materials $ 14.00 Direct labor (2 direct labor hours × $8.00 per hour) 16.00 Manufacturing overhead (2 direct labor hours × $10.00 per hour) 20.00 Total standard cost per unit $ 50.00 The manufacturing overhead rate is based on a normal capacity level of 600,000 direct labor hours. (Normal capacity is defined as the level of capacity needed to satisfy average... Edney Company employs a standard cost system for product costing. The per-unit standard cost of its... Edney Company employs a standard cost system for product costing. The per-unit standard cost of its product is: Raw materials $ 14.00 Direct labor (2 direct labor hours × $8.00 per hour) 16.00 Manufacturing overhead (2 direct labor hours × $10.00 per hour) 20.00 Total standard cost per unit $ 50.00 The manufacturing overhead rate is based on a normal capacity level of 600,000 direct labor hours. (Normal capacity is defined as the level of capacity needed to satisfy average... dney Company employs a standard cost system for product costing. The per-unit standard cost of its... dney Company employs a standard cost system for product costing. The per-unit standard cost of its product is: Raw materials $ 14.00 Direct labor (2 direct labor hours × $8.00 per hour) 16.00 Manufacturing overhead (2 direct labor hours × $10.00 per hour) 20.00 Total standard cost per unit $ 50.00 The manufacturing overhead rate is based on a normal capacity level of 600,000 direct labor hours. (Normal capacity is defined as the level of capacity needed to satisfy average... ADVERTISEMENT Subjects Accounting Advanced Math Anatomy and Physiology Biology Chemistry Civil Engineering Computer Science Economics Electrical Engineering Finance History Math Mechanical Engineering Operations Management Physics Psychology Statistics and Probability Nursing Other ADVERTISEMENT Latest Questions An organization faces several internal and external risks in economic decision, such as high competition, failure... You have an Hfr strain of E. coli that contains wild-type genes for maltose catabolism and... Go on a company's website (who produces a good) and find their sustainability and or/community section.... Integrated Waveguide Technologies (IWT) is a 6-year-old company founded by Hunt Jackson and David Smithfield to... The Sunbelt Corporation has $44 million of bonds outstanding that were issued at a coupon rate... in java Write an interface for a CD player. It should have the standard operations (i.e.... A 2.9 kg block with a speed of 3.6 m/s collides with a 5.8 kg block... ADVERTISEMENT About @ 2020 WizEdu