Question

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

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

  • Maple Leaf produced and sold 90,000 tires for $46 each. Budgeted production was 94,000 tires.
  • Standard variable costs per tire follow:
Direct materials: 4 pounds at $3.00 $ 12.00
Direct labor: 0.55 hours at $19.00 10.45
Variable production overhead: 0.23 machine-hours at $15 per hour 3.45
Total variable costs $ 25.90
  • Fixed production overhead costs:

Monthly budget $1,380,000

  • Fixed overhead is applied at the rate of $16 per tire.
  • Actual production costs:
Direct materials purchased and used: 385,000 pounds at $1.80 $ 693,000
Direct labor: 45,000 hours at $19.30 868,500
Variable overhead: 22,000 machine-hours at $15.30 per hour 336,600
Fixed overhead 1,396,000

Required:

a. Prepare a cost variance analysis for each of the variable costs for Maple Leaf Productions. (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.)

Direct Materials Direct Labor Variable Overhead
Actual costs
Actual inputs at standard price
Flexible budget
Price variance
Efficiency variance
Cost variance

b. Prepare a fixed overhead cost variance analysis. (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.)

Total fixed overhead cost variance   

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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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Answer #1

B C 90000 А 1 a. Direct material: 2 Actual output Standard units per unit of output Standard units of material required for a20 Material usage quantity variance SP*(SQ-AQ) 3*(360000-385000) -75000 23 75000 U 24 25 Direct labor: 26 Particulars Amount40 Labor rate/Price variance AH*(SR-AR) 45000*(19-19.3) -13,500.00 13500 U 42 45 Labor efficiency variance 46 SR*(SH-AH) 19*(VOH cost/Controllable variance SC-AC 310500-336600 -26100 26100 U 65 VOH rate variance AH*(SR-AR) 22000*(15-15.3) -66001 660080 [1380000/16] 82 FOH cost variance 2 SC-AC 1440000-1396000 44000 44000 F 44UUU 445401 87 FOH cost volume variance SR*(SU-BUCredit 385000*3] 6,93,000 4,62,000 11,55,000 97 c. Jouranl: 98 Account Debit 99 Direct material inventory 11,55,000 100 Accou3,10,500 3,10,500 119 Finished goods inventory 120 Variable manufacturing overhead applied 121 [Variable manufacturing overhe16000 140 Fixed m/f overhead expenditure variance 141 [Recording Fixed overhead variances] 142 143 Finished goods inventory 1

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