Question

Flandro Company uses a standard cost system and sets its predetermined overhead rate on the basis of direct labor-hours. The following data are taken from the company's planning budget for the current year: Denominator activity (direct labor-hours) Variable manufacturing overhead coat Fixed manufacturing overhead coat $ 4,250 The standard cost card for the company's only product is given below. Standard Inputs Direct materials Direct labor Mutacturing overhead Total standard cost per Standard Quantity Dr Hours yards 2 hours 2 hour Standard Price or Rate 1.75 per yard $ 9.50 per hour $11.40 per hour (1) (2) $ 7.00 19.00 22.80 $48.80 During the year, the company produced 7,800 units of product and incurred the following actual results: Materials purchased, 49,500 yards at 91.70 per yard Materials used in production (in yards) Direct labor cost incurred, 16,000 hours at $7.85 per hour Variable manufacturing overhead cost incurred Fixed manufacturing overhead coatineurred $ 84,150 32,200 125,600 $44.550 $ 95,800 Required: 1. Create a new standard cost card that separates the variable manufacturing overhead per unit and the fixed manufacturing overhead per unit 2. Compute the materials price and quantity variances. Also, compute the labor rate and efficiency variances 3. Compute the variable overhead rate and efficiency variances. Also, compute the fixed overhead budget and volume variances. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Create a new standard cost card that separates the variable manufacturing overhead per unit and the fixed manufacturing Overhead per unit (Round your answers to 2 decimal places.) Direct materials yards at DLHS per yard per DLH per DUH Direct labor Variable manufacturing Overhead Fixed manufacturing overhead Standard cost per unit DLHS DLHS per DLH $ 0.00 Required 2 > < Prey 6 of 6 Next >

Answer 1

1) Standard rate of variable manufacturing overhead= Estimated variable manufacturing overhead cost/Estimated direct labor hours

= $44250/15000= $2.95 per DLH

Standard rate of fixed manufacturing overhead= Estimated fixed manufacturing overhead cost/Estimated direct labor hours

= $126750/15000= $8.45 per DLH

Direct materials	4	yards at	$1.75	per yard	($1.75*4)= $7.00
Direct labor	2	DLHs	$9.50	per DLH	($9.50*2)= 19.00
Variable manufacturing overhead	2	DLHs	$2.95	per DLH	($2.95*2)= 5.90
Fixed manufacturing overhead	2	DLHs	$8.45	per DLH	($8.45*2)= 16.90
Standard cost per unit					$48.80

2) Materials price variance= Actual quantity*(Standard price-Actual price)

= 49500*($1.75-1.70)= $2475 F

Standard quantity= 7800*4= 31200

Materials quantity variance= Standard price*(Standard quantity-Actual quantity)

= $1.75(31200-32200)= $1750 U

Labor rate variance= Actual hours*(Standard rate-Actual rate)

= 16000*($9.50-7.85)= $26400 F

Standard hours= 7800*2= 15600

Labor efficiency variance= Standard rate*(Standard hours-Actual hours)

= $9.50*(15600-16000)= $3800 U

Materials variances:
Price variance	$2475	F
Quantity variance	$1750	U
Labor variances:
Rate variance	$26400	F
Efficiency variance	$3800	U

3) Variable overhead rate variance= Actual hour*Standard rate-Actual hour*Actual rate

= $(16000*$2.95)-44550= $2650 F

Standard hours= 7800*2= 15600

Variable overhead efficiency variance= Standard hour*Standard rate-Actual hour*Standard rate

= (15600*$2.95)-(16000*$2.95)= $1180 U

Fixed overhead budget variance= Budgeted fixed overhead-Actual fixed overhead

= $126750-96800= $29950 F

Fixed overhead applied= Standard hours*Standard rate

= 15600*$8.45= $131820

Fixed overhead volume variance= Fixed overhead applied-Budgeted fixed overhead

= $131820-126750= $5070 F

Variable overhead variances:
Rate variance	$2650	F
Efficiency variance	$1180	U
Fixed overhead variances:
Budget variance	$29950	F
Volume variance	$5070	F