Question

"Wonderful! Not only did our salespeople do a good job in meeting the sales budget this year, but our production people did a good job in controlling costs as well," said Kim Clark, president of Martell Company. "Our $18,300 overall manufacturing cost variance is only 1.2% of the $1,525,000 standard cost of products made during the year. That's well within the 3% parameter set by management for acceptable variances. It looks like everyone will be in line for a bonus this year." The company produces and sells a single product. The standard cost card for the product follows: Inputs Direct materials Direct labor Variable overhead Fixed overhead Total standard cost per unit (1) Standard Quantity or Hours 2 feet 1.4 hours 1.4 hours 1.4 hours (2) Standard Price or Rate 8.45 per foot 16 per hour 2.50 per hour 6 per hour $ $ $ $ Standard Cost (1) X (2) $ 16.90 22.40 3.5e 8.40 $ 51.20 The following additional information is available for the year just completedi a. The company manufactured 30,000 units of product during the year b. A total of 64,000 feet of material was purchased during the year at a cost of $8.55 per foot. All of this material was used to manufacture the 30,000 units produced. There were no beginning or ending Inventories for the year. Prev 1 of 1 Next > 10:43 PM 11/9/2019 e to search o et LO 9e

Answer 1

Material variances: Standard co Halerial Action standard COST SC SD SOS actual cost of A AP AQƏXAP. AP Quan ABOX AP Abox so material 60000 89.05 507000 64000 $8.55 547200 Suoso materia price variances Standard cost of - actual cost Асор Guook - h" = 540800 - 547200 = $6400 o Material Quantity variance = Standard cost - standard cost of Actual Quantity = 507000 - 540800 - $33800 U Standard casta Labour variance: Standard cost . Actual cast Actual Howr SH BR SHISR A H AR AHXAR AHASR Labows 42000910 672000 43500 $15.8 687300 696000 (30000x112) Labour pare variance = Standard east of Actual Hours - Actual cost 2 696000 - 687300 -48700 F Labour efficiency variance : Standard cost - Standard cost of Actual Hours - 672000 - 696000 $24000

st vosabb overhod vasBonces slandand cost ACWO) cost SH SP SHOP (givens " A ARANHAR variable 42000 2.5 105000 (350 ) Josep "X108000 Budgeted variables overhad for Actu HOW vond AHASR Quenhood (30000 GANONDA ) $ 108750 (13500X9.5) variaba overhead Rate variance : Budgeted variable overhead - actual cost Гол асоо нооо оозуза = 108750 - 108000 = $750 F variable overhead efficiency variance Standard cost Budgeted variable overhead for actual Hours worked = 105000 - 108750 = $3750 O Firud overhead variance: Absorbed Fired overhead Firudover 25,000 head (30000 x 3.4) CACAgy ou} elv Standard Rake) Budgeled Find overhead (given) 210000 Actua Find overhead egiven) 21800 Fixed overhead expenditure variance Budgeted fined - actual Find overhead overhead - 210000 - 911800 = $1800 W Fined overhead volume variance : Absorbed fined overhad - Budgeted fired overhead = 252000 - 210000 $42000 F