Capbell company produces engine parts for large motors. The company uses stardar

Question

Capbell company produces engine parts for large motors. The company uses stardard cost system for production costing and control. The standard cost sheet for one of its higher volume products, a valve, is as follows:

Direct Materials (7lbs. @5.40) $37.80

Direct Labor (1.75 hrs. @ $18) $31.50

Variable Overhead ( 1.75hrs @ $4.00) $7

Fixed Overhead (1.75 hrs @ $3.00) $5.25

Standard unit cost $81.55

During the year, Campbell had the following activity related to valve production:

A)Production of valves totaled 20,600 units.

B)A total of 135,400 pounds of direct materials was purchased at $5.36 per pound.

C)There were 10,000 pounds of direct materials in beginning inventory (carried at $5.40 per pound). There was no ending inventory.

D)The company used 36,500 direct labor hours at a total cost of $656,270.

E)Actual fixed overhead totaled $110,000.

F)Actual variable overhead totaled $168,000.

Campbell produces all of its valves in a single plant. Normal activity is 20,000 units per year. Standard overhead rates are computed based on normal activity measured in standard direct labor hours.

Required:

1. Compute the direct materials price and usage variances.

2. compute the direct labor hour rate and efficiency variances

3. compute overhead variances using a four variance analysis.

Explanation / Answer

3)

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