The following standard costs were developed for one of the John Miller Company\'

Question

The following standard costs were developed for one of the John Miller Company's products STANDARD COST CARD PER UNIT Materials: 10 pounds x $8 per pound Direct labor: 3 hours x $32 per hour Variable manufacturing overhead: $20 per hour Fixed manufacturing overhead: SX per hour $80.00 96.00 Total standard cost per unit The following information is available regarding the company's operations for the period. Units produced: Materials purchased and used: Direct labor 15,000 153,000 47,000 pounds@ $7.50 per pound hours@$34 per hour Manufacturing overhead incurred: Variable Fixed $912,000 S2,700,000 Budgeted fixed manufacturing overhead for the period is $2,700,000, and expected capacity for the period is 45,000 direct labor hours. The normal capacity is 15,000 units. Required: a. Calculate the standard fixed manufacturing overhead rate. b. Complete the standard cost card per unit for the product. c. Calculate the direct materials price variance. d. Calculate the direct labor efficiency (time) variance e. Calculate the overhead controllable variance

Explanation / Answer

a) Standard fixed manufacturing overhead rate =  Budgeted fixed manufacturing overhead / expected capacity

=$ 2,700,000/ 15,000

= $ 180 per DLH

b)

c)

Direct material price variance = AQ* (SP ? AP)

= 153000 * ( 8 - 7.5)

= 76500 F

d) Direct labor Efficiency (time ) Variance =Standard rate * ( Actual hours worked – Standard hours allowed )

= $ 32 * ( 45000 - 47000 )

= $ 64000 U

STANDARD COST CARD PER UNIT Material: 10 pounds * $8/pound 80 Direct labor: 3 hours * $32/hour 96 Variable overhead: 3 hours * $20/hour 60 Manufacturing overhead: 3 hours *$ 180/hour 540 Total standard cost per unit 776

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