Monty Unlimited provided the following information. Normal capacity is 5,100 bot

Question

Monty Unlimited provided the following information.

Normal capacity is 5,100 bottles of fragrance. Actual production this quarter was 4,900 bottles of fragrance.

Develop the standard cost card for Monty Unlimited. Include materials, labour, variable overhead, and fixed overhead?

Direct Materials $_______

Direct Labour    ______

Variable Overhead    _____

Fixed Overhead    ______

Actual materials (purchased and used) 219,000 ml @ $0.32 per ml Actual direct labour 748 hours @ $13.00 per hour Actual variable overhead 990 machine hours @ $4.90 per machine hour Actual fixed overhead $20,087

Explanation / Answer

Solution:

Material price variance = $10,950 U

(SP - AP) * AQ = -$10,950

(SP - $0.32) * 219,000 = $10,950

Standard price of material = $0.27 per ml

Material quantity variance = $2,241 U

(SQ - AQ) * SP = -$2,241

(SQ - 219000) * $0.27 = -$2,241

SQ = 210700 ml

Standard quantity of material per bottle = 210700 / 4900 = 43 ml per bottle

Labor rate variance = $748 F

(SR - AR) * AH = $748

(SR - $13) * 748 = $748

SR = $14 per hour

Labour Efficiency Variance = $182 U

(SH - AH) * SR = - $182

(SH -748) * $14 = -$182

SH = 735 hours

Standard hours per bottle = 735 / 4900 = 0.15 hours per bottle

Variable overhead spending variance = $99 F

(SR - AR) * AH = $99

(SR - $4.90) * 990 = $99

SR = $5 per machine hour

Variable overhead efficiency variance = $50 U

(SH - AH) * SR = -$50

(SH - 990) * $5 = - $50

SH = 980 machine hours

Standard machine hours per bottle = 980 / 4900 = 0.20 machine hour per bottle

Fixed overhead budget variance = $1,370 U

Budgeted overhead - Actual fixed overhead = -$1,370

Budgeted fixed overhead = $20,087 - $1,370 = $18,717

Predetermined fixed manufacturing overhead per unit = $18,717 / 5100 = $3.67 per unit

Standard Cost Card Particulars Qty Rate Per Unit Cost Direct Material 43 $0.27 $11.61 Direct labor 0.15 $14.00 $2.10 Variable manufacturing overhead 0.2 $5.00 $1.00 Fixed manufacturing overhead 1 $3.67 $3.67 Standard cost per unit $18.38

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