Question

P23-27A (similar to) Question Help SmartSound manufactures headphone cases. During September 2018, the company produced and sold 105,000 cases and recorded the following cost data: .: (Click the icon to view the cost data.) Read the requirements. Requirement 1. Compute the cost and efficiency variances for direct materials and direct labor. Begin with the cost variances. Select the required formulas, compute the cost variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U). (Abbreviations used: AC = actual cost; AQ = actual quantity; FOH = fixed overhead; SC = standard cost; SQ = standard quantity.) A Data Table Formula Variance Direct materials cost variance = Direct labor cost variance Standard Cost Information Requirements Direct Materials $ Quantity 2 parts 0.02 hours 0.02 hours Cost 0.15 per part 8.00 per hour 10.00 per hour Direct Labor Variable Manufacturing Overhead Compute the cost and efficiency variances for direct materials and direct labor. For manufacturing overhead, compute the variable overhead cost and efficiency variances and the fixed overhead cost and volume variances. SmartSound's management used better quality materials during September. Discuss the trade-off between the two direct material variances. Fixed Manufacturing Overhead ($30,400 for static budget volume of 95,000 units and 1,900 hours, or $16 per hour) Actual Cost Information Print Done Choose (207,000 parts @ (1,600 hours @ $ 0.20 per part) $ 8.10 per hour) Direct Materials Direct Labor Variable Manufacturing Overhead Fixed Manufacturing Overhead $ 41,400 12,960 8,000 30,000 A parts 4 remaining Clear All

Answer 1

Answer of 0 Dicct materials cost variance = (acteral cost-standard cost ]xacteal Quality = $0.00 $0.15) x 207,000 parts = $0.05 x 20 7,000 parts = $10,350 (unfavourable) Direet matericely cast Variance - $10,350 (un favouvable) Direet lobor cost variance = (toteal cost - standard cost) y Actual Quality =($3.10-$8.00 ) x 1,600 hours = go. 1) x 1,600 hours =$160 Can favourable) Borect labor cost variance = $160 kun forovou mbile) Direet materials Ethiciency variance = (netual Quality - Standard Quotity) x.standard cost . = (207,000 -(105.000xa)x $0.15

= (201,000-(a 6000 ) )x $0.15 = $450 (feavourable) .: Direet materials obticiency variance = $ 450 lavourable ) / Direct lobos ehficiency variance - (Actual Quality standard Quality] x Standard cost = (1,600 -(105,000 %0.02))x 48.00 = (1,600-Ca 100 ) )x!2.00 = $4,000 favourable) .. Discet labor efficiency variance. = $ 4,000 flavourable) @ vol cost-variance. - Actuall vot -- (standard Cost x artuced Reality) =$8,000-($10.00x (105,000 0.02)) = $8,000 – $21000 = $13,000 favourable) rivol cast variance = $13,00 0 (favorable)

☺) Volt Elbiciency variance - Gaetual Quality standard Quality) V xstandard cost =(1,600~ 1,900) x$10.00 = $3,000( faesourable) oivott afficiency variance = $3.000 (Havourable) forled cost- vorance = Actual FOH – Budgeted Fol =$30,000 - $30,400 = $400 (favourable) infored cost variance = fuoo flavourable) Fott Efficiency wariance = Budyted Fot. -Allocated Folt =$30,400 - (105,000 40.02 x$16) = $30,400 - (33600) = $3,200 (favourable) .: FOH Ebficiency variante = $3200 favourable)

☺ s ince smart sound's used better quality materials during september, the divert material price variance is aduerse indi cating an increase in cost covey set standards, -->> However, the adverse price veriance is compensated to an eit teint by the favorable direct material Elbiciency variance as high quality material moght have resulted in lan Quality 4 dieet werterial being consumed. zo-