Calculating Direct Materials, Direct Labor, Variable Manufacturing Overhead
Gotta Cotta, Inc., manufactures basic terra cotta planters. Its standard cost information for the past year follows:
| Standard Quantity | Standard Price (Rate) | Standard Unit Cost |
Direct costs |
|
|
|
Clay | 2 lbs. | $ 0.80 per lb. | $1.60 |
Direct labor | 0.5 hr. | 12.00 per hr. | 6.00 |
Variable manufacturing overhead |
| 0.40 per direct labor hour | 0.20 |
Fixed manufacturing overhead ($480,000/800,000 units) |
|
| 0.60 |
Gotta Cotta has the following actual results for the past year:
Number of units produced and sold | 750,000 |
Number of pounds of clay used | 1,,450,000 |
Cost of clay purchased and used | $1,087,500 |
Number of labor hours worked | 375,000 |
Direct labor cost | $3,937,500 |
Variable overhead cost | $157,500 |
Fixed overhead cost | $505,000 |
Required:
Calculate the following for Gotta Cotta:
1. Direct materials price, quantity, and total spending variances.
2. Direct labor rate, efficiency, and total spending variances.
3. Variable overhead rate, efficiency, and total spending variances.
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