You have recently accepted a position with Vitex, Inc., the manufacturer of a po

ID: 2425369 • Letter: Y

Question

You have recently accepted a position with Vitex, Inc., the manufacturer of a popular consumer product. During your first week on the job, the vice president has been favorably impressed with your work. She has been so impressed, in fact, that yesterday she called you into her office and asked you to attend the executive committee meeting this morning for the purpose of leading a discussion on the variances reported for last period. Anxious to favorably impress the executive committee, you took the variances and supporting data home last night to study.

On your way to work this morning, the papers were laying on the seat of your new, red convertible. As you were crossing a bridge on the highway, a sudden gust of wind caught the papers and blew them over the edge of the bridge and into the stream below. You managed to retrieve only one page, which contains the following information:

Variances Reported

You recall that manufacturing overhead cost is applied to production on the basis of direct labor-hours and that all of the materials purchased during the period were used in production. Work in process inventories are insignificant and can be ignored.

It is now 8:30 a.m. The executive committee meeting starts in just one hour; you realize that to avoid looking like a bungling fool you must somehow generate the necessary “backup” data for the variances before the meeting begins. Without backup data it will be impossible to lead the discussion or answer any questions

Questions :

What was the actual cost per pound of material? (Round your answer to 2 decimal places.)

What was the actual rate paid per direct labor-hour? (Round your answer to 2 decimal places.)

How much actual variable manufacturing overhead cost was incurred during the period?

Explanation / Answer

1. Actual units produced can be calculated by using the Direct materials quantity variance formula:

Direct materials quantity variance = Standard price * ( Actual quantity - Standard quantity)

Actual quantity used = 36,000

Actual units = 36,000 /2.2 = 16,364

2. Actual quantity used = 36,000

3. Actual cost per pound of material:

Direct materials price variance = Actual Quantity * (Actual price - Standard price)

4. Actual hours worked:

Direct labor efficiency variance = Standard rate * (Actual hours - Standard hours)

5. Actual rate per labor hour:

Direct labor price variance = Actual hours * (Actual rate - Standard rate)

6. Actual variable manufacturing overhead cost:

Total Standard cost 598,400 Standard cost per unit 37.4 Standard units 16,000 Standard number of pounds 35,200.0 34000 =17*(x-35200) x-35200 =34000/17= 2000 x =2000+34000 =36000

Navigate

You have recently accepted a position with Vitex, Inc., the manufacturer of a po

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.

You have recently accepted a position with Vitex, Inc., the manufacturer of a po

Question

Explanation / Answer

Related Questions

Navigate