Question

Maple Leaf Production manufactures truck tires. The following information is available for the last operating period.

• Maple Leaf produced and sold 92,000 tires for $40 each. Budgeted production was 100,000 tires.
• Standard variable costs per tire follow.

Direct materials: 4 pounds at $3.00	$	12.00
Direct labor: 0.30 hours at $15.50		4.65
Variable production overhead: 0.20 machine-hours at $18 per hour		3.60
Total variable costs	$	20.25

• Fixed production overhead costs:

Monthly budget $1,950,000

• Fixed overhead is applied at the rate of $19.50 per tire.
• Actual production costs:

Direct materials purchased and used: 391,000 pounds at $2.70	$	1,055,700
Direct labor: 21,500 hours at $15.80		339,700
Variable overhead: 19,000 machine-hours at $18.30 per hour		347,700
Fixed overhead		1,960,000

Required:
a. Prepare a cost variance analysis for each variable cost for Maple Leaf Productions.
b. Prepare a fixed overhead cost variance analysis.
c. (Appendix) Prepare the journal entries to record the activity for the last period using standard costing. Assume that all variances are closed to cost of goods sold at the end of the operating period.

Answer 1

$1193000 Answer Page No ③ @ Coof variance analysis Direct materials ..Adual cosf = $1055700 Aclu al n put at standard price = 391000 pounds x # 3 = flexible budget = 98000 x $12 = $1104000 Direct tabos Actual cort = $339700 Aclü al input at standard price = 21500 hrs * $ 15:50 = $333250 flexible budget e 90000 x $4.65 = $427800 Variable overhead Actual cosf = '$ 3.44700 Actual imput at blandard price = 19000 x $18 = $ 34 2000 flexible budget = 92000 * $3.60 = $ 331200

Page: No @ Particular Ofect material Direct labor Variable overhead $344400 $ 342000 Actual costs ca] $1055700 $339700 Actual input at standard price b) $ 1173000 $333250 flexible budget.co) $ 1104000 $ 421800 $331200 Police variance (a-b)(d) $114300F) $6450 (0) $5400 (0) Efficiency variance (6-c)e) 69000 (0) -494550 (F) $10800 cu) coof variance (dte) - $48300(P) - $88100(F) $16500 (6) o fixed overhead coof variance analysis Budgeted overhead = $1950,000 Overbead' applied = 93000 x $19.50 $1494000 Actuat corsk = $ 1960,000 fixed overhead coof variance = (1969000 – 1494000) = $166coche) fized overhead produchion volume variance = ( 1794,000 -- 1950,000) . =-156000 (5) fixed overhead Spending cost verſance = 1960,000 -- 1950000 = $10,000 (U)

Page No ③ Budgeted stasand budgeted standard Standard overhead Achual Action Actuel units I rate | OH 1 unit I rate applied I units date cost 100,000 19.50 €1950,000 92000 19.50 $1494000 92000 21:30135 $ 1960,000 Debit Gredit $1104000 $ 69000 $117300 $1055700 $ 427800 6450 © Towinal costumes sol Particular Tol work in process inventory Material efficiency variance Material price variance Accounts payable work in process inventory Direct labor price coriance Direct laboo eficiency variance ücages payable coork in process Poventorey variable overhead applied Actual variable overhead Miscellanecus payable e inventory account applied variable overhead Variable overhead price variance Variabie avenhead ebbiciency vepriance Helial variable overhead $94550 $ 339700 $331200 $ 331200 $347700 $347700 $ 331200 $5900 $10800 $347400

Page No @ sno Particular I Debit Gredit work in process inventory 1794000 fined overhead (applic) $1494000 fixed overhead Cactical) $1960,000 Miscellaneous payable & inventory accounts - $1960,000 fried overbead cappléed) $1894000 - Praxed overhead price variance $ 10,000 fired overhead production volume variance $156000 fixed overhead Cactual) $1960,000 fixed goods inventory $3949000 cook in process inventory $3949000 Accounts receivable (92000X40) $3680000 Sales revenue $3680000 cost of goods sold $3979000 Finished goods inventory $3979000 fixed or production volume variance $156000 Marial price variance $117300 Direct labor chficiency variance $94550 Material efficiency variance $69000 Direct labor price vanilance $6450 Variable OH price variance $5700 Variable on efficiency varijance $10 800 fixed on price variance $ 10,000 cost of goods sold $265900