p12-48a $18.55 Total standard cost per test month are used The lab does not main
ID: 2519171 • Letter: P
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p12-48a
$18.55 Total standard cost per test month are used The lab does not maintain an inventory of Petri dishes. Therefore, the dishes purchased each th of May 2016, when 2,500 tests were conducted, resulted in the following: Direct materials (2.530 dishes) Direct labour (1,240 hours) Variable overhead Fixed overhead 5,060 26,040 10,100 5,700 Monthly budgeted fixed overhead is $6.000. Revenues for the month were $55,000, and selling and administrative expenses were $2.000 Instructions (a) Calculate the price and quantity variances for direct materials and direct labour. (b) Calculate the total overhead variance (c) Prepare an income statement for management. (d Provide possible explanations for each unfavourable variance P12-4SA Pointe Claire Company applies overhead based on direct labour hours. Two direct labour hours are required for each unit of product. Planned production for the period was set at 9,000 units. Manufacturing overhead is budgeted at $135,000 for the period (20% of this cost is fixed). The 17,200 hours worked during the period resulted in the production of 8,500 units. The variable manufacturing overhead cost incurred was $108,500 and the fixed manufacturing overhead cost was $28,000. Instructions (a) Calculate the variable overhead spending variance for the period b) Calculate the variable overhead efficiency (quantity) variance for the period. c) Calculate the fixed overhead budget (spending) variance for the period. d) Calculate the fixed overhead volume variance for the period. (adapted from CMA Canada, now CPA Canada 12.49A Fayman Manufacturing Company uses standard costs with itsjob-order cost accounting system. In January der (Job 84) was received for 5,500 units of product D. The standard cost of one unit of product D is as follows: Direct materials-1.4 kg at $4 per kilogram s 5.60Explanation / Answer
a) Variable overhead spending variance = Actual hours worked * (Actual overhead rate - standard overhead rate)
=17,200 x (108500/17200 - 108000/9000*2)
= $5300 (Unfavorable)
b) Variable Overhead Efficiency variance = Standard Rate per hour× (Standard Hours for actual output – Actual Hours Worked)
= 108000/$18000 x ( 2 x $8500 - 17200)
= 6 x ( -200)
= $1200 (Unfavorable)
c) Fixed Overhead budget (spending) Variance = Budgeted Fixed Overheads – Actual Fixed Overheads
= 27000 - 28000
= $1000 (Unfavorable)
d) Fixed Overhead Volume Variance = Absorbed Fixed Overheads – Budgeted Fixed Overheads
=(17000 x 6) - (18000 x 6)
= $ 6000 (Unfavorable)
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