P11-55B Comprehensive standards and variances problem (Learning Objectives 1, 2,
ID: 2392607 • Letter: P
Question
P11-55B Comprehensive standards and variances problem (Learning Objectives 1, 2,3, 5, & 6) Nautical Awning manufactures awnings and uses a standard cost system. Nautical allocates overhead based on the number of direct labor hours. The following are the company's cost and standards data Direct material 18.0 yards per awning at $10.00 per yard Direct labor 2.0 hours per awning at $13.00 per hour Variable MOH standard rate $5.00 per direct labor hour Predetermined fixed MOH standard rate $10.00 per direct labor hour Total budgeted fixed MOH cost $34,000 Actual cost and operating data from the most recent month follows: Purchased 35,460 yards at a total cost of $333,324 Used 31,300 yards in producing 1,800 awnings Actual direct labor cost of $45,457 for a total of 3,470 hours Actual variable MOH cost $19,085 Actual fixed MOH cost $39,500 All manufacturing overhead is allocated on the basis of direct labor hours.Explanation / Answer
1)
2)
Direct material variance = Actual material cost - standard cost
= [31300*9.4]- [1800*180]
= 294220- 324000
= - 29780 F
**actual material cost per yard = 333324/35460 = $ 9.4 per yard
**standard cost = actual output * standard cost per awning (calculalted in part 1)
B)Direct labor variance = Actual labor cost -standard cost
= 45457 - [1800*26]
=45457 - 46800
= - 1343 F
C)Variable manufacturing overhead = 19085 - [1800*10]
19085 -18000
1085 U
D)Fixed manufacturing overhead = Actual -standard budgeted overhead
39500 - [1800*20]
39500 - 36000
3500 U
3)
Overhead variance (variable and fixed) is related to labor variance as overhead rate is based on direct labor hours
Direct material [18*10] 180 Direct labor [2*13] 26 Variable manufacturing overhead [2*5] 10 Fixed manufacturing overhead [2* 10] 20 Standard cost of one awning 236Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.