Homework 6 Direct materials (30 Ibs. $5.10 per Ib.) Direet 1abor (6 hrs. $15 per

Question

Homework 6 Direct materials (30 Ibs. $5.10 per Ib.) Direet 1abor (6 hrs. $15 per hr.) Faetory overhead-variable (6 hrs. $7 per hr.) Factory overhead-tized (6 hrs. $11 per hr.) Total standard cost 153.00 90.00 42.00 66?00 351.00 The units per quarter. The following flexible budget information is available. predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 56,000 ting Levele Produetion in anits Standard direct labor hours Budgeted overhead 50,400 302,400 39,200 235,200268,800 Fixed factory overhead Variable factory overhead $2.956,800 $1,646,400 $2,956,800 $1,881,600 $2,956,BOO $2,116,800 During the current quarter, the company operated at 90% of c apacity and produced so,400 units of product actual ired hours. Units produced were assigned the following standard costs Direct Baterials (1,512,000 ??. e ss.10 per Direet labor (302,400 hrs. $15 per hr.) Factory overhead (302,400 hrs. si8 per hr Total standard cost ; 1,111,200 4,536,000 43 200 $17,690,400 Actual costs incurred during the current quarter follow Direct materiale (3,499,000 bs.6.30 per 1b.) 9,443,700 Direot labor (299,400 hrs. $12.50 per he.) rixed factory overhead costr Variable factory overhead eosts Total actual costs ,742,500 2,604,700 2.438 500 $18,229,400 MacBook Air

Explanation / Answer

1) direct material cost variances: DMPV = ( Actual price -Standard price) Actual quantity used (6.30 -5.10) 1499000 = 1798800 U DMQV = (Standard usage for actual production - actual usage) Std. PriceDirect material (30*50400 - 1499000) * 5.10 = 66300 F TDMV = DMPV + DMQV = 1798800 U + 66300 F = 1732500 U 2) direct labor cost variances: DLRV = ( Actual rate - Standard rate) Actual hours used (12.50 - 15)299400 = 748500 F DLEV = (Standard hours usage for actual production - actual hours) Std. rate (50400*6 - 299400) 15 = 45000 F TDLV = DLRV + DLEV = 748500 F + 45000 F = 793500 F 3) Overhead Controllable Variance = Actual overhead expense - (budgeted overhead per unit * Std units) 2438500 - (6*7 * 50400) = 2438500 - 2116800 = 321700 U Fixed overhead volume variance = ( Actual production - Planned normal production) * std. overhead per unit [50400 - (56000*80%) ]* 66 = (50400 - 44800) *66 = 369600 F

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