During the period Porter Inc. produced 1,000 units of product. The flexible budg
ID: 2445560 • Letter: D
Question
During the period Porter Inc. produced 1,000 units of product. The flexible budget for standard costs is: Direct materials $ 43,000 Direct labor $ 67,000 Variable overhead $ 30,000 Fixed overhead $ 25,000 variances for the period are: Direct materials price $ 400 U Direct materials efficiency $ 500 F Direct labor price $ 600 F Direct labor efficiency $ 200 U Variable overhead spending $ 300 F Variable overhead efficiency $ 100 F Fixed overheadd spending $ 500 F Fixed overhead production volume $ 1,000 U The direct materials inventory increased during the period by 1,000 (at standard cost) Required: (a) What is the actual cost of direct materials purchased during the period? (b) What is the actual cost of direct labor incurred? ( c) What was the variable overhead allocated? (d) What was the budgeted fixed overhead? ( e) What was the total under or overapplied overhead for the period? During the period Porter Inc. produced 1,000 units of product. The flexible budget for standard costs is: Direct materials $ 43,000 Direct labor $ 67,000 Variable overhead $ 30,000 Fixed overhead $ 25,000 variances for the period are: Direct materials price $ 400 U Direct materials efficiency $ 500 F Direct labor price $ 600 F Direct labor efficiency $ 200 U Variable overhead spending $ 300 F Variable overhead efficiency $ 100 F Fixed overheadd spending $ 500 F Fixed overhead production volume $ 1,000 U The direct materials inventory increased during the period by 1,000 (at standard cost) Required: (a) What is the actual cost of direct materials purchased during the period? (b) What is the actual cost of direct labor incurred? ( c) What was the variable overhead allocated? (d) What was the budgeted fixed overhead? ( e) What was the total under or overapplied overhead for the period?Explanation / Answer
Standard Cost Variances Actual cost Direct Material 43000 Direct materila Price 400 U Direct material efficiency 500 F 42900 Direct labour 67000 Direct labour price 600 F Direct labour efficiency 200 U 66600 Variable overhead 30000 Variable over heads spending 300 F Variable overheads efficiency 100 F 29600 Fixed overhead 25000 Fixed over heads spending 500 F Fixed over heads production volume 1000 U 25500 Increase in direct material inventory 1,000 (at standard cost) The number of units produced 1,000 units Assume 1 unit material required for 1 unit of production: Material cost per unit (43,000/1000) 43 per unit Unfavourable variance 400 Actual cost per unit (43400/1000) 43.4 Closing inventory 1000 unit Total purchase 2000 unit Purchase cost (2000*43.4) 86,800 Actual cost of direct labour 66,600 Variable over heads allocated Variable overhead standard 30000 Variable overheads efficiency 100 F Variable over heads allocated 29,900 Budjected Fixed overheads 25,000/1,000 25 per unit Fixed overhead 25000 Fixed over heads production volume 1000 U Under absorbed over heads 1,000
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