Sweetwater Company manufactures two products, Mountain Mist and Valley Stream. T
ID: 2405264 • Letter: S
Question
Sweetwater Company manufactures two products, Mountain Mist and Valley Stream. The company prepares its master budget on the basis of standard costs The following data are for March Mountain Mist Direct materials Direct labor Variable overhead (per direct labor-hour) Fixed overhead (per month) Expected activity (direct labor-hours) 3 ounces at $14.60 per ounce 5 hours at $60.40 per hour $48 370,640 6,560 4 ounces at $17.20 per ounce 6 hours at $80 per hour $53.40 399,360 7,800 Actual results Direct material (purchased and used) Direct labor Variable overhead Fixed overhead Units produced (actual) 4,000 ounces at $14.40 per ounce 4,990 hours at $63.00 per hour $263,550 $325,950 1,090 units 4,500 ounces at $19.50 per ounce 7,500 hours at $84.60 per hour $387,510 399,300 1,240 units Required a. Compute a variance analysis for each variable cost for each product. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.) Price Variance Direct materials Direct labor Variable overhead b. Compute a fixed overhead variance analysis for each product. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F'" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.) Stream Price Variance Price Variance Foxed overheadExplanation / Answer
Solution Mountain mist (for 1090 units) Valley steam(for 1240 units) Standard Actual Standard Actual Material Material Material Material Qty Rate Cost Qty Rate Cost Qty Rate Cost Qty Rate Cost 3270 14.6 47742 4000 14.4 57600 4960 17.2 85312 4500 19.5 87750 Labour Labour Labour Labour Hour Rate Cost Hour Rate Cost Hour Rate Cost Hour Rate Cost 5450 60.4 329180 4990 63 314370 7440 80 595200 7500 84.6 634500 Variable OH Variable OH Variable OH Variable OH Hours Rate Cost Hours Rate Cost Hours Rate Cost Hours Rate Cost 5450 48 261600 4990 52.82 263550 7440 53.4 397296 7500 51.67 387510 1 Material Price Variance Material Price Variance (Std Rate - Actual Rate)*Actual Qty (Std Rate - Actual Rate)*Actual Qty (14.6-14.4)*4000 (17.2-19.5)*4500 800 favorable -10350 Adverse Material Qty Variance Material Qty Variance (Std Qty- Actual Qty)* Std Rate (Std Qty- Actual Qty)* Std Rate (3270-400)14.6 (4960-4500)80 -10658 Adverse 36800 Favorable 2 Labour Rate Variance Labour Rate Variance (Std Rate - Actual Rate)* Actual hours (Std Rate - Actual Rate)* Actual hours (60.4-63)*4990 (80-84.6)*7500 -12974 Adverse -34500 Adverse Labour Efficiency Variance Labour Efficiency Variance (Std Hours - actual hours)*Std Rate (Std Hours - actual hours)*Std Rate 27784 Favorable -4800 Adverse 3 Variable OH rate Variance44 Variable OH rate Variance44 (Std Rate- Actual rate)* Actual qty (Std Rate- Actual rate)* Actual qty (48-52.82)4990 (53.4-51.67)*7500 -24051.8 Adverse 6510 Favourable Variable oh Efficiency Variance Variable oh Efficiency Variance (Std hours -Actual Hours)*Std rate (Std hours -Actual Hours)*Std rate (5450-4990)*48 (7440-7500)*53.4 22080 favorable -3204 Adverse Fixed oh variances Fixed oh variances Budgeted units = budgeted hours/ hours per unit Budgeted units = budgeted hours/ hours per unit 1312 1300 Standard fixed cost per unit= 370640/1312 Standard fixed cost per unit= 399360/1300 282.5 307.2 Standard fixed cost = 282.5*1090 Standard fixed cost = 307.2*1240 307925 380928 4 FH price variance= Standard fixed cost - actual fixed cost FH price variance= Standard fixed cost - actual fixed cost =307925-325950 =380928-399300 -18025 Adverse -18372 Adverse FH volume variance= budgeted fixed oh - standard fixed oh FH volume variance= budgeted fixed oh - standard fixed oh = 370640-307925 =399360-380928 62715 Adverse 18432 Adverse
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.