Question

Flandro Company uses a standard cost system and sets its predetermined overhead rate on the basis...

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) 10,000
Variable manufacturing overhead cost $ 37,500
Fixed manufacturing overhead cost $ 64,500

The standard cost card for the company’s only product is given below:

Inputs (1)
Standard
Quantity
or Hours
(2)
Standard
Price
or Rate
Standard
Cost
(1) × (2)
Direct materials 4 yards $ 2.55 per yard $ 10.20
Direct labor 2 hours $ 8.50 per hour 17.00
Manufacturing overhead 2 hours $ 10.20 per hour 20.40
Total standard cost per unit $ 47.60

During the year, the company produced 5,200 units of product and incurred the following actual results:

Materials purchased, 33,000 yards at $2.45 per yard $ 80,850
Materials used in production (in yards) 21,450
Direct labor cost incurred, 11,000 hours at $8.55 per hour $ 94,050
Variable manufacturing overhead cost incurred $ 38,950
Fixed manufacturing overhead cost incurred $ 75,350

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.

Homework Answers

Answer #1

Question 1

1 2 3= 1*2
Particulars Standard Quantity Standard Rate / Price Standard Cost
Direct Materials 4 Yards $ 2.55 Per Yard $ 10.2
Direct Labour 2 Hours $ 8.50 Per Hour $ 17
Variable Manufacturing Overhead 2 Hours $ 3.75 per Hour $ 7.50
Fixed Manufacturing Overhead 2 Hours $ 6.45 per Hour $ 12.90
Total $ 47.60

Variable Manufacturing Rate = Variable Manufacturing Overhead / Total Direct Labour Hours

= 37,500 / 10,000 Hours = $ 3.75 per DLH

Fixed Manufacturing Overhead Rate = Fixed Manufacturing Overhead / Total Direct Labour Hours

= 64,500 / 10,000 = $ 6.45 per DLH

Question 1

Direct Materials Price Variance = (Standard Rate per Yard - Actual Rate per Yard) * Actual Quantity of Material Used

Standard Rate per Yard = $ 2.55

Actual Rate per Yard = $ 2.45

Actual Quantity of Material Used = 21,450

Direct Materials Price Variance = (2.55 - 2.45) * 21,450

Direct Materials Price Variance = $ 2145 Favorable Variance

Direct Materials Quantity Variance = (Standard Quantity of Material for Actual Output - Actual Quantity Used) * Standard Rate per Yard

Standard Rate per Yard = $ 2.55

Actual Quantity Used = 21,450

Standard Quantity For Actual Output = 5,200 Units * 4 Yards per Unit = 20,800 Yards

Direct Materials Quantity Variance = (20,800 - 21,450) * 2.55

Direct Materials Quantity Variance = ($ 1657.5) Unfavorable Variance

Direct Labour Rate Variance = (Standard Labour Rate per Hour - Actual Labour Rate per Hour) * Actual Hours Worked

Standard Labour Rate per Hour = $ 8.50

Actual Labour Rate per Hour = $ 8.55

Actual Hours Worked = 11,000 Hours

Direct Labour. Rate Variance = (8.50 - 8.55) * 11,000

Direct Labour Rate Variance = ($ 550) Unfavorable Variance

Direct Labour Efficiency Variance = (Standard Labour Hours for Actual Output - Actual Hours Worked) * Standard Labour Rate per Hour

Standard Labour Rate per Hour = $ 8.50

Actual Hours Worked = 11,000

Standard Labour Hours for Actual Output = 5,200 Units * 2 Hours per Unit = 10,400

Direct Labour Efficiency Variance = (10,400 - 11,000) * 8.50

Direct Labour Efficiency Variance = ($ 5100) Unfavorable Variance

Question 3

Variable Overhead Rate Variance = (Standard Variable Overhead Rate per Hour * Actual Hours) - Actual Variable Overhead

Actual Variable Overheads = $ 38,950

Standard Variable Overhead Rate per Hour = $ 3.75

Actual Hours = 11,000 Hours

Variable Overhead Rate Variance = (3.75 * 11,000) - 38,950

Variable Overhead Rate Variance = $ 2300 Favourable Variance

Variable Overhead Efficiency Variance = (Standard Variable Overhead Rate per Hour * Standard Labour Hours for Actual Output ) - (Standard Variance Overhead Rate per Hour * Actual Hours)

Standard Variable Overhead Rate per Hour = $ 3.75

Actual Hours = 11,000 Hours

Standard Labour Hours for Actual Output = 10,400

Variable Overhead Efficiency Variance = (3.75 * 10,400) - (3.75 * 11,000)

Variable Overhead Efficiency Variance = ($ 2250) Unfavorable Variance

Fixed Overhead Budget Variance = Budgeted Fixed Overhead - Actual Fixed Overhead

Actual Fixed Overhead = $ 75,350

Budgeted Fixed Overhead = $ 64,500

Fixed Overhead Budget Variance = (64,500 - 75,350)

Fixed Overhead Budget Variance = ($ 10,850) Unfavorable Variance

Fixed Overhead Volume Variance = (Standard Fixed Overhead Rate per Hour * Standard Hours for Actual Production) - Budgeted Fixed Overhead

Standard Fixed Overhead Rate per Hour = $ 6.45

Budgeted Fixed Overhead = $ 64,500

Standard hours For Actual Output = 10,400 Hours

Fixed Overhead Volume Variance = (10,400 * 6.45) - 64,500

Fixed Overhead Volume Variance = $ 2580 Favourable Variance

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Flandro Company uses a standard cost system and sets predetermined overhead rates on the basis of...
Flandro Company uses a standard cost system and sets predetermined overhead rates on the basis of direct labor-hours. The following data are taken from the company’s budget for the current year:   Denominator activity (direct labor-hours) 17,000   Variable manufacturing overhead cost $ 57,800   Fixed manufacturing overhead cost $ 161,500 The standard cost card for the company’s only product is given below:   Direct materials, 4 yards at $2.20 per yard $ 8.80      Direct labor, 2 hour at $8.60 per hour 17.20...
Bronfenbrenner Co. uses a standard cost system for its single product in which variable overhead is...
Bronfenbrenner Co. uses a standard cost system for its single product in which variable overhead is applied on the basis of direct labor hours. The following information is given: Standard costs per unit: Raw materials (1.5 grams × $16 per gram) $24.00 Direct labor (0.75 hours × $8 per hour) $6.00 Variable overhead (0.75 hours × $3 per hour) $2.25 Actual experience for current year: Units produced 22,400 units Purchases of raw materials (21,000 grams × $17 per gram) $357,000...
Beakins Company produces a single product. The standard cost card for the product follows: Direct materials...
Beakins Company produces a single product. The standard cost card for the product follows: Direct materials (4 yards @ $5 per yard)............................. $20 Direct labor (1.5 hours @ $10 per hour).............................. $15 Variable manufacturing overhead (1.5 hrs. @ $4 per hour) $6 During a recent period the company produced 1,200 units of product. Various costs associated with the production of these units are given below: Direct materials purchased (6,000 yards)..... $29,400 Direct materials used in production................ 5,120 yards Direct labor...
Lane Company manufactures a single product that requires a great deal of hand labor. Overhead cost...
Lane Company manufactures a single product that requires a great deal of hand labor. Overhead cost is applied on the basis of standard direct labor-hours. The budgeted variable manufacturing overhead is $4.40 per direct labor-hour and the budgeted fixed manufacturing overhead is $1,764,000 per year. The standard quantity of materials is 4 pounds per unit and the standard cost is $9.00 per pound. The standard direct labor-hours per unit is 1.5 hours and the standard labor rate is $13.20 per...
Lane Company manufactures a single product and applies overhead cost to that product using standard direct...
Lane Company manufactures a single product and applies overhead cost to that product using standard direct labor-hours. The budgeted variable manufacturing overhead is $2.40 per direct labor-hour and the budgeted fixed manufacturing overhead is $384,000 per year. The standard quantity of materials is 4 pounds per unit and the standard cost is $4.00 per pound. The standard direct labor-hours per unit is 1.5 hours and the standard labor rate is $12.20 per hour. The company planned to operate at a...
Colavita Co. uses a standard cost system for its single product. Variable overhead is applied on...
Colavita Co. uses a standard cost system for its single product. Variable overhead is applied on the basis of direct labor hours. The following information is given: Standard costs per unit: Raw materials (1.5 grams x $16 per gram $24.00 Direct Labor (0.75 hours x $8 per hour) $6.00 Variable Overhead (0.75 hours x $3 per hour) $2.25 Actual experience for current year: Units produced 22,400 units Purchases of raw materials (21,000 grams x $17 per gram $357,000 Raw materials...
Zee Corporation has developed the following cost standards for the production of its leather backpacks: Standard...
Zee Corporation has developed the following cost standards for the production of its leather backpacks: Standard Cost Per Backpack Leather (2.0 yards × $25 per yard) $50.00 Direct labor (2.3 hours × $10.00 per hour) $23.00 Variable overhead (2.3 hours × $16.00 per hour) $36.80 Variable overhead at Zee is applied on the basis of direct labor hours. The actual results for last month were as follows: Number of backpacks produced 12,500 Direct labor hours incurred 27,950 Yards of leather...
The Zurich Chocolate Company uses standard cost in the manufacture of its line of fine chocolates....
The Zurich Chocolate Company uses standard cost in the manufacture of its line of fine chocolates. Operating data for the past week is summarize as follows:             Standard Cost Card – per box:                         Direct materials, .5 kg at $16 per kg.             $ 8.00                         Direct labor, 1.5 hours at $15/hour                22.50                         Variable overhead, 1.5 hours at $10/hour      15.00                         Standard cost per unit                                     $45.50 The company produced 4,000 boxes of chocolates. Direct materials purchased were 2,150 kg....
Problem 10A-8 Applying Overhead; Overhead Variances [LO10-3, LO10-4] Lane Company manufactures a single product and applies...
Problem 10A-8 Applying Overhead; Overhead Variances [LO10-3, LO10-4] Lane Company manufactures a single product and applies overhead cost to that product using standard direct labor-hours. The budgeted variable manufacturing overhead is $4.60 per direct labor-hour and the budgeted fixed manufacturing overhead is $1,935,000 per year. The standard quantity of materials is 4 pounds per unit and the standard cost is $9.50 per pound. The standard direct labor-hours per unit is 1.5 hours and the standard labor rate is $13.30 per...
chapter 9 h1 Problem 9A-8 Applying Overhead; Overhead Variances [LO9-6, LO9-7] Lane Company manufactures a single...
chapter 9 h1 Problem 9A-8 Applying Overhead; Overhead Variances [LO9-6, LO9-7] Lane Company manufactures a single product and applies overhead cost to that product using standard direct labor-hours. The budgeted variable manufacturing overhead is $5.60 per direct labor-hour and the budgeted fixed manufacturing overhead is $2,880,000 per year. The standard quantity of materials is 4 pounds per unit and the standard cost is $12.00 per pound. The standard direct labor-hours per unit is 1.5 hours and the standard labor rate...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT