Question

Bullseye Company manufactures dartboards. Its standard cost information follows: Standard Quantity Standard Price (Rate) Standard Unit...

Bullseye Company manufactures dartboards. Its standard cost information follows:

Standard Quantity Standard Price (Rate) Standard Unit Cost
Direct materials (cork board) 3.50 sq. ft. $ 2.40 per sq. ft. $ 8.40
Direct labor 1 hrs. $ 11.00 per hr. 11.00
Variable manufacturing overhead (based on direct labor hours) 1 hrs. $ 0.65 per hr. 0.65
Fixed manufacturing overhead ($58,500 ÷ 130,000 units) 0.45


Bullseye has the following actual results for the month of September:

Number of units produced and sold 110,000
Number of square feet of corkboard used 400,000
Cost of corkboard used $ 1,000,000
Number of labor hours worked 125,000
Direct labor cost $ 1,262,500
Variable overhead cost $ 72,000
Fixed overhead cost $ 54,000

Required:
1.
Calculate the direct materials price, quantity, and total spending variances for Bullseye. (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.)
2. Calculate the direct labor rate, efficiency, and total spending variances for Bullseye.(Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.)

3. Calculate the variable overhead rate, efficiency, and total spending variances for Bullseye. (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable/Overapplied and "U" for unfavorable/underapplied.)

Homework Answers

Answer #1

1. Actual cost of cork board = 1000000/400000 = $2.50

. Direct materials price vaariance = (2.40-2.50)*400000 = $40,000 U

Direct material quantity variance = (385000-400000)*2.40 = $36,000 U

Total spending variance = $40000+$36000 = $ 76,000 U

2.Actuallabour rate per hour = 1262500/125000 = $10.1

Labour rate variance = (11-10.1)*125000 = $1,12,500 F

Labour Efficiency variance = (110000-125000)*11 = $1,65,000 U

Total Spending variance = $112500F+$165000U =$52,500 U

3. Actual variable overhead cost perhour = 72000/125000 = $.576 per hour

Variable overhead rate variance = (.65-576)*125000 = $9,250F

Variable overhead efficiency variance = (125000- 110000)*.65 = $9,750 U

Total spending variance = $9250F + $9750U = $500 U

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