Question

MA Company uses a standard cost system in which manufacturing overhead costs are applied to units of the company's single product on the basis of direct laborhours (DLHs). The cost information for the product is as follows:

Standard Cost per unit of product:

Direct Materials, 2 metres at $4 per metre ....................................... $ 8

Direct Labor, 2 DLHs at $10 per DLH .................................................. $20

Variable Manufacturing Overhead, 2 DLHs at $2 per DLH ............ $ 4

Fixed ManufacturingOverhead, 2 DLHs at $4.5 per DLH ................ $ 9

Standard cost per unit ......................................................................... $41

The following data pertain to last year's activities:

At the start of the year, the company had forecast the manufacture of 15,000 units and the sale of 14,000 units at a selling price of $50.

During the year, the company manufactured 18,000 units of product. Of the 18,000 units of product manufactured, 16,000 units were sold at a selling price $48.

A total of 40,000 meters of direct materials was purchased during the year at a cost of $3 per meter. 38,000 meters were used to manufacture the 18,000 units

The company worked 35,000 direct labor-hours during the year at a cost of $8 per hour

The denominator activity level was 30,000 direct labor-hours.

Budgeted fixed manufacturing overhead costs were $135,000 while actual fixed manufacturing overhead costs were $150,000.

Actual variable manufacturing overhead costs were $74,000.

1. The revenue price variance is:

A. $32,000 (U) B. $0 C. $36,000 (U) D. $28,000 (U) E. None of the above

2. The direct materials quantity variance is:

A. $8,000 (U) B. $8,000 (F) C. $40,000 (U) D. $40,000(F) E. None of the above

3. The labor rate variance is:

A. $10,000 (U) B. $10,000 (F) C. $70,000 (U) D. $70,000 (F) E. None of the above

4. The variable manufacturing overhead spending variance is:

A. $2,000 (U) B. $2,000 (F) C. $4,000 (U) D. $4,000 (F) E. None of the above

5. The fixed overhead volume variance is:

A. $27,000 (U) B. $27,000 (F) C. $15,000 (U) D. $15,000 (F) E. None of the above

6.The allocation of manufacturing overhead is:

A. $10,000 under-allocated B. $10,000 over-allocated C. $29,000 under-allocated D. $19,000 over-allocated E. None of the above

Please write the calculation process. please～～

Answer 1

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Answer 2

1. The revenue price variance is: Actual revenue = Actual units sold * Selling price = 16,000 units * $48 = $768,000 Budgeted revenue = Budgeted units sold * Selling price = 14,000 units * $50 = $700,000

Revenue price variance = Actual revenue - Budgeted revenue = $768,000 - $700,000 = $68,000 (U)

Therefore, the correct answer is E. None of the above.

2. The direct materials quantity variance is: Standard quantity of materials = Standard quantity per unit * Actual units produced Standard quantity per unit = 2 meters Actual units produced = 18,000 units

Standard quantity of materials = 2 meters * 18,000 units = 36,000 meters

Direct materials quantity variance = (Standard quantity of materials - Actual quantity of materials) * Standard cost per unit Actual quantity of materials = Total purchased - Materials unused

Total purchased = 40,000 meters Materials unused = Total purchased - Materials used Materials used = 38,000 meters

Actual quantity of materials = 40,000 meters - (40,000 meters - 38,000 meters) = 38,000 meters

Direct materials quantity variance = (36,000 meters - 38,000 meters) * $4 = $8,000 (U)

Therefore, the correct answer is A. $8,000 (U).

3. The labor rate variance is: Actual labor cost = Actual direct labor-hours * Actual rate per hour Actual direct labor-hours = 35,000 hours Actual rate per hour = $8

Actual labor cost = 35,000 hours * $8 = $280,000

Labor rate variance = (Actual rate per hour - Standard rate per hour) * Actual direct labor-hours Standard rate per hour = $10

Labor rate variance = ($8 - $10) * 35,000 hours = $-70,000 (U)

Therefore, the correct answer is C. $70,000 (U).

4. The variable manufacturing overhead spending variance is: Actual variable manufacturing overhead cost = Actual direct labor-hours * Actual rate per DLH Actual direct labor-hours = 35,000 hours Actual rate per DLH = $2

Actual variable manufacturing overhead cost = 35,000 hours * $2 = $70,000

Variable manufacturing overhead spending variance = Actual variable manufacturing overhead cost - Budgeted variable manufacturing overhead cost Budgeted variable manufacturing overhead cost = Budgeted DLHs * Variable overhead rate per DLH Budgeted DLHs = Denominator activity level = 30,000 hours Variable overhead rate per DLH = $2

Budgeted variable manufacturing overhead cost = 30,000 hours * $2 = $60,000

Variable manufacturing overhead spending variance = $70,000 - $60,000 = $10,000 (U)

Therefore, the correct answer is A. $10,000 (U).

5. The fixed overhead volume variance is: Fixed overhead volume variance = Actual fixed manufacturing overhead cost - (Budgeted fixed manufacturing overhead cost * (Actual DLHs / Denominator activity level))

Actual fixed manufacturing overhead cost = $150,000 Budgeted fixed manufacturing overhead cost = $135,000 Actual DLHs = 35,000 hours Denominator activity level = 30,000 hours

Fixed overhead volume variance = $150,000 - ($135,000 * (35,000 hours / 30,000 hours)) = $15,000 (F)

Therefore, the correct answer is D. $15,000 (F).

6. The allocation of manufacturing overhead is: Allocation of manufacturing overhead = Applied manufacturing overhead -