1. The following standards for variable manufacturing overhead have been establi

Question

1. The following standards for variable manufacturing overhead have been established for a company that makes only one product:

  Standard hours per unit of output

7.2

hours

  Standard variable overhead rate

$13.60

per hour

The following data pertain to operations for the last month:

  Actual hours

2,750

hours

  Actual total variable manufacturing overhead cost

$38,090

  Actual output

250

units

What is the variable overhead efficiency variance for the month?

$13,610 U

$12,920 U

$690 F

$24,480 F

2. Midgley Corporation makes a product whose direct labor standards are 0.6 hours per unit and $20 per hour. In April the company produced 6,950 units using 3,670 direct labor-hours. The actual direct labor cost was $77,070.

The labor efficiency variance for April is:

$10,000 U

$10,000 F

$6,330 F

$6,330 U

3. Diskind Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During October, the company budgeted for 8,400 units, but its actual level of activity was 8,450 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for October:

Data used in budgeting:

Fixed element
per month

Variable element
per unit

  Revenue

$35.90       

  Direct labor

$0      

$6.50       

  Direct materials

0      

11.90       

  Manufacturing overhead

41,000      

2.20       

  Selling and administrative expenses

27,200      

.50       

  Total expenses

$ 68,200      

$21.10       

Actual results for October:

  Revenue

$302,100

  Direct labor

$54,310

  Direct materials

$99,230

  Manufacturing overhead

$52,000

  Selling and administrative expenses

$30,640

The spending variance for direct materials in October would be closest to:

$730 F

$1,325 U

$730 U

$1,325 F

4. Bossie Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity based costing system:

  Costs:

  Wages and salaries

$285,000

  Depreciation

243,000

  Utilities

170,000

  Total

$698,000

  Distribution of resource consumption:

Activity Cost Pools

Assembly

Setting up

Other

Total

  Wages and salaries

55%    

35%    

10%    

100%    

  Depreciation

10%    

20%    

70%    

100%    

  Utilities

15%    

55%    

30%    

100%    

How much cost, in total, would be allocated in the first-stage allocation to the Assembly activity cost pool?

$193,883

$206,550

$383,900

$104,700

5. Veltri Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.72 direct labor-hours. The direct labor rate is $10.50 per direct labor-hour. The production budget calls for producing 7,500 units in October and 7,300 units in November. The company guarantees its direct labor workers a 40-hour paid work week. With the number of workers currently employed, that means that the company is committed to paying its direct labor work force for at least 5,480 hours in total each month even if there is not enough work to keep them busy. What would be the total combined direct labor cost for the two months?

$115,080.00

$111,888.00

$112,728.00

$131,838.00

1. The following standards for variable manufacturing overhead have been established for a company that makes only one product:

Explanation / Answer

Answer 1. b. $12920 (U) variable overhead efficiency variance = Standard overhead rate x (standard hours - Actual hours) variable overhead efficiency variance = $13.60 x (1800 - 2750) = $12920 (Unfavourable) Answer 2. b. $10,000 F Labour efficiency variance = Standard rate x (standard hours - Actual hours) Labour efficiency variance = $20 x (4170 - 3670) = $10000 (F) Answer 3. d. $1,325 F Spending Variance for Direct Material = (SP - AP) X No. of Units Purchased Spending Variance for Direct Material = (11.90 - 11.74) X 8450 = $1325 (F) Answer 4. b. $206,550 Activity Cost Pools Assembly Setting Up Other Total Wages & Salaries 156750 99750 28500 $285,000 Depreciation 24300 48600 170100 $243,000 Utilities 25500 93500 51000 $170,000 Total 206550 241850 249600 698000 Answer 5. a. $115,080.00 Calculation of Combined Direct Labour Costs October November Total Direct Labour Rate per Hr. $10.50 $10.50 Lab. Hr. per Unit 0.72 0.72 Production in Units 7500 7300 Total Lab. Hrs. 5400 5256 Minimum Lab Hrs (For payment) 5480 5480 Labour Payment Per Month $57,540 $57,540 $115,080

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