Calculating Direct Material, Direct Labor, Variable Overhead Variances
Drink Well, Inc., manufactures custom-ordered commemorative beer steins. Its standard cost information follows:
| Standard Quantity | Standard Price (Rate) | Standard Unit Cost |
| |||
Direct costs |
|
|
|
Clay | 1.5 lbs. | $ 1.60 per lb. | $ 2.40 |
Direct labor | 1.5 hrs. | 12.00 per hr. | 18.00 |
Variable MOH |
| 1.20 per direct labor hour | 1.80 |
Fixed MOH ($250,000/100,000 units) |
|
| 2.50 |
Drink Well had the following actual results last year:
Number of units produced and sold | 110,000 |
Number of pounds of clay used | 180,000 |
Cost of clay | $ 279,000 |
Number of labor hours worked | 150,000 |
Direct labor cost | $1,950,000 |
Variable overhead cost | $ 195,000 |
Fixed overhead cost | $ 295,000 |
Required:
Calculate the following for Drink Well:
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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