Question

Problem 24-01A a-b (Video)

Kingbird Corporation manufactures a single product. The standard cost per unit of product is shown below.

Direct materials—1 pound plastic at $6.00 per pound		$ 6.00
Direct labor—1.5 hours at $12.20 per hour		18.30
Variable manufacturing overhead		9.00
Fixed manufacturing overhead		15.00
Total standard cost per unit		$48.30

The predetermined manufacturing overhead rate is $16.00 per direct labor hour ($24.00 ÷ 1.5). It was computed from a master manufacturing overhead budget based on normal production of 8,700 direct labor hours (5,800 units) for the month. The master budget showed total variable costs of $52,200 ($6.00 per hour) and total fixed overhead costs of $87,000 ($10.00 per hour). Actual costs for October in producing 4,300 units were as follows.

Direct materials (4,500 pounds)		$ 27,900
Direct labor (6,250 hours)		77,500
Variable overhead		78,430
Fixed overhead		26,670
Total manufacturing costs		$210,500

The purchasing department buys the quantities of raw materials that are expected to be used in production each month. Raw materials inventories, therefore, can be ignored.

(a) Compute all of the materials and labor variances. Total materials variance Materials price variance Materials quantity variance Total labor variance 0 Labor price variance 0 Labor quantity variance 0 (b) Compute the total overhead variance. Total overhead variance

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and calculation. For detailed answer refer to the supporting sheet.

Answer 3 Parta) IS 5 Total Material Variance $ 2,100 Unfavourable 6 Material Price Variance 900 Unfavourable 7 Materials Quantity Variance $ 1,200 Unfavourable 8 Total labor Variance s 1,190 Favourable 9 Labor Price Variance $ 1,250 Unfavourable 10 Labor Quantity Variance $ 2,440 Favourable 11 12 Part b) 13 Total Overhead Variance $ 20,600 Favourable 14 15 Calculations 16 Parta) 17 Total Material Variance = actual cost - standard cost 18 = 27900-(4300*6) 19 = $2100 Unfavourable 20 21 Material Price Variance = actual cost-(standard price'actual pounds) 22 = 27900 - 16*4500) 23 = $900 Unfavourable 24 25 Material Quantity variance = (actual aty-standard qty) * Standard Price 26 = (4500-(4300*1))*6 27 = $ 1200 Unfavourable 28

28 29 Total labor variance = actual cost - standard cost 30 = 77500 - (4300*18.3) 31 = $ 1190 Favourable 32 33 Labor Price Variance = actual cost- (standard Price* actual hours) 34 = 77500-(12.2*6250) 35 = $ 1250 Unfavourable 36 37 Labor effeciency variance = (actual hours-standard hours)*standard price 38 = (6250-(4300*1.5))*12.2 39 = $ 2440 Favourable 40 41 Part b) 42 Total Overhead variance = actual overheads - standard overheads 43 = (26670+78430) - ((15*5800)+(9*4300)) 44 =$ 20600 Favourable 45