Assume that Timekiller, Inc., manufactures a new electronic game console. The cu

Question

Assume that Timekiller, Inc., manufactures a new electronic game console. The current standard costs sheet for a game console follows: Direct materials,? kilograms at $5 per kilogram $ ? per game Direct labor, 0.25 hours at ? per hour ? per game Overhead, 0.25 hours at ? per hour ? per game ________________________________________ ________________________________________ Total costs $ 13 per game ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________ Assume that the following data appeared in Timekiller’s records at the end of the past month: Actual production 33,000 units Actual sales 21,000 units Materials (42,500 kilograms) $ 215,900 Materials price variance 3,400 U Materials efficiency variance 14,500 U Direct labor price variance 34,020 U Direct labor (6,300 hours) 109,620 Underapplied overhead (total) 3,600 U ________________________________________ There are no materials inventories.

Required:

(a) Complete the standard cost sheet for a game console given below. What was the direct labor efficiency variance? (Round kilograms to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

(b) Assume that all production overhead is fixed and that the $3,600 underapplied is the only overhead variance that can be computed. What are the actual and applied overhead amounts?

Explanation / Answer

Standard Cost sheet per game Direct Material 1.2 Kg at $5 per kg 6 Durect Labour $12.6 required .25 hours 3.15 Variable overhead $15.4 per hour and .25 hours at 3.85 Total 13 Variable overhead=13-6-3.15 Variable overhead rate= 3.85/.25hours 15.4 Actual Production 33000 Actual sales 21000 Qty of actual material used 42500 Total material used 215900 Material Price Variance 3400 U Material Efficiency Variance 14500 U Material Price Variance Actual cost-Actual Qty * Standard Price*Actual Qty Material Efficiency Variance 5*(42500-Standard Qty) 14500 U 5Standard Qty 14500-212500 -SQ -39600 SQ A 39600 Actual Production B 33000 Standard qty per unit 1.200 Direct Labor Price Variance Actual Hours*(Actual rate-Standard Rate) 30420 U 109620-6300*SR 30420 -6300SR -79200 SR 12.6 rounded off to 1 decimalto get exact variance Ans a Direct Labour Efficiency Varinace Standard Rate*(Actual Hours-Standard hours) 12.6*(6300-(33000*.25)) -24570 F Ans b It is underapplied by $3600 so actual is more than applied by $3600 Actual Overhead-Applied Overhead 3600 Actual Overhead-33000*3.85 3600 Actual Overhead 130650 Applied Overhead 33000*3.85 127050

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