Question

Requirements 1. Calculate the standard cost of one awning. 2. Calculate the following variances: a. The direct material variances. b. The direct labor variances. c. The variable manufacturing overhead variances. d. The fixed manufacturing overhead variances. 3. Explain what each of the variances you calculated means and give at least one possible explanation for each of those variances. Are any of the variances likely to be interrelated? Print Done

Answer 1

Formula sheet

Fixed manufacturing overhead should remain constant regardless of the number of units produced Since number of units produced is not known, therefore original fixed MOH rate can be used to calculate the standard cost per awning 4 Standard direct labour hours per awning Standard Direct Materials per awning Standard Direct material rate Standard Direct labor rate Standard Variable Overhead rate Standard Fixed Overhead rate 4 hours 21 yards $13 per yard $14 per yard $7 per direct labour $6 per direct labour 10 12 13 14 15 16 17 Standard cost of one owning can be calculated as follows: Standard cost Direct materials Direct labor Variable MOH Fixed MOH Total Standard cost Standard Cost per unit $273 $24 (Using the fixed MOH rate and standard labour hours per awning) $381 19 21 Hence Standard cost per Yawnings $381 23

Fixed manufacturing overhead should remain constant regardless of the numbe Since number of units produced is not known, therefore original fixed MOH rate 4 Standard direct labour hours per awning Standard Direct Materials per awning Standard Direct material rate Standard Direct labor rate Standard Variable Overhead rate Standard Fixed Overhead rate hours yards per yard per yard per direct labour per direct labour 21 13 12 13 14 15 16 17 18 19 Standard cost of one owning can be calculated as follows: Standard cost Direct materials Direct labor Variable MOH Fixed MOH Total Standard cost Standard Cost per ur D10 D6 -D6 D11 SUM(D16:D19) (Using the fixed MO 21 Hence Standard cost per Yawnings -D20 23