Materials Price Variance= Actual Quantity Used × (Standard Price − Actual Price)
= 148450( 4.20 – 4) = 29690 Favorable
Actual Price per Pound = 593800 / 148450 = 4 pounds
Materials Quantity Variance = Standard Price × (Standard Quantity − Actual Quantity)
= 4.20 (149,940 pounds -148450) =6258 Favorable
Standard Quantity Allowed = 147 batches × 1,020 pounds/batch = 149,940 pounds
Labor Rate Variance= Actual Labor Hours × (Standard Rate − Actual Rate)
2200 x(8.50 -8) = 1100 Favorable
Actual Rate per Hour = 17600 / 2200 =$8.00/hour
Labor Efficiency Variance = Standard Hourly Rate × (Standard Hours − Actual Hours)
= 8.50 x(2058- 2220)= -$1,207 (or $1,207 Unfavorable)
Standard Hours Allowed = 1 47x 14= 2058 hours
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Slick Corporation is a small producer of synthetic motor oil. During May, the company produced 5,000 cases of lubricant. Eac contains 12 quarts of synthetic oil. To achieve this level of production, Slick purchased and used 16,500 gallons of direct mate cost of $20,449. It also incurred average direct labor costs of $13 per hour for the 4,115 hours worked in May by its productior personnel. Manufacturing overhead for the month totaled $9,569, of which $2,200 was...
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Erkens Company uses a job costing system with normal costing and applies factory overhead on the basis of machine hours. At the beginning of the year, management estimated that the company would incur 51,750,000 of factory overhead costs and use 70,000 machine hours. Erkens Company recorded the following events during the month of April: a. Purchased 202,000 pounds of materials on account; the cost was 54.50 per pound b. Issued 131,000 pounds of materials to...
Grub Chemical Corporation has developed cost standards for the production of its new chocolate, Choco. The variable cost standards below relate to each 10 gallon batch of Choco: Milk chocolate (2 pounds $0.85 per pound) Direct labor (1.25 hours * $12.00 per hour) Variable overhead (1.25 hours * $44.00 per hour) Standard Cost Per Batch $ 1.70 $15.00 $55.00 Variable manufacturing overhead at Grub is applied based on direct labor-hours. The actual results for last month were as follows: Number...
Bowser Products operates a small plant in New Mexico that produces dog food in batches of 1,500 pounds. The product sells for $6 per pound. Standard costs for 2018 are: Standard direct labor cost = $15 per hour Standard direct labor hours per batch = 10 hours Standard price of material A = $0.35 per pound Standard pounds of material A per batch = 800 pounds Standard price of material B = $0.55 per pound Standard pounds of material B...
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Determining Unit Costs, Variance Analysis, and Interpretation Big Dog Company, a manufacturer of dog food, produces its product in 1,000-bag batches. The standard cost of each batch consists of 6,000 pounds of direct materials at $0.30 per pound, 48 direct labor hours at $8.50 per hour, and variable overhead cost (based on machine hours) at the rate of $10 per hour with 18 machine hours per batch. The following variable costs were...
Coffee Bean, Inc. (CBI), is a processor and distributor of a variety of blends of coffee. The company buys coffee beans from around the world and roasts, blends, and packages them for resale. CBI offers a large variety of different coffees that it sells to gourmet shops in one-pound bags. The major cost of the coffee is raw materials. However, the company’s predominantly automated roasting, blending, and packing processes require a substantial amount of manufacturing overhead. The company uses relatively...
Standard material cost per unit of product is 0.5 pounds at
$7.40 per pound, and standard direct labor cost is 1.5 hours at
$13.00 per hour. The total actual materials cost represents 4,900
pounds purchased at $7.70 per pound. Total actual labor cost
represents 14,200 hours at $12.60 per hour. According to standards,
variable overhead rate is applied at $0.70 per direct labor hour
(based on a normal capacity of 15,000 direct labor hours or 10,000
units of product). Assume...
Inc., manufactures a single product in which variable manufacturing overhead is assigned on the basis of standard direct labor-hours. The company uses a standard cost system and has established the following standards for one unit of product: Standard Quantity Standard Price or Rate Standard Cost Direct materials 6.20 pounds $ 1.00 per pound $ 6.20 Direct labor 0.50 hours $ 37.50 per hour $ 18.75 Variable manufacturing overhead 0.50 hours $ 8.90 per hour $ 4.45 During March, the following...
Java Source, Inc., (JSI) buys coffee beans from around the world and roasts, blends, and packages them for resale. Some of JSI’s coffees are very popular and sell in large volumes, while a few of the newer blends sell in very low volumes. JSI prices its coffees at manufacturing cost plus a markup of 25%. For the coming year, JSI’s budget includes estimated manufacturing overhead cost of $2,200,000. JSI assigns manufacturing overhead to products on the basis of direct labor-hours....
Ceramics Etc is a manufacturer of large flower pots for urban settings. The company has these standards: Direct materials (resin). . . . . . . . . . . . . . . . . . . . 13 pounds per pot at a cost of $3.00 per pound Direct labor. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0...