Chron Inc. manufactures hydroponic growing systems for the home organic gardener

Question

Chron Inc. manufactures hydroponic growing systems for the home organic gardener. In December, the company completed production of 3,200 units. The actual operating results follow 21,728.00 units produced deprec - equipment direct labor dollars direct material dollars factory insurance factory rent factory supervision indirect labor indirect material repairs & maintenance utilities 3,200 387,200.00 1,680,000.00 direct material quantity 56,000 ft 25,408.00 40,480.00 direct labor hours 49,664.00 23,936.00 sales price per unit 28,384.00 13,568.00 43,232.00 17,600 1,250.00 Management felt that this production run was exemplary and decided to use the per unit results as standards for future production runs. In March, the company completed another successful quarter. Actual operating results are given below deprec- - equipment direct labor dollars direct material dollars factory insurance factory rent factory supervision indirect labor indirect material repairs & maintenance utilities 3,600 24,444.00 units produced 433,116.00 1,911,600.00 direct material quantity 64,800 ft 28,542.00 45,540.00 direct labor hours 52,206.00 25,877.00 sales price per unit 30,841.00 19,080 1,250.00 8,229.00 49,533.00

Explanation / Answer

1. calculation of standard rate for direct material =1680000/56000= $30 /unit

Standard usage of DM = 56000/3200=17.5/unit of output and standard qty for 3600 unit will be 3600*17.5=63000

Actual usage =64800/3600=18/unit of output

Actual rate=1911600/64800=29.5/unit

(i) Direct material variance = AQ*AP-SQ*SP=64800*29.5-63000*30=21600 unfavourable

(ii) Direct labour variance = AH*AR-SH*SR=(433116)-(19800*22)=2484 favourable

where as

Standard hour = 17600/3200*3600=19800

Standard rate =387200/17600=22/hour

(iii) Variable over head Variance=Actual overhead -Standard overhead

(52206+25877+30841+8229+49533)-166715=29 favourable

Where as standard overheads based on direct labour hour are =153784/17600*19080=166715

iV) Fixed overhead variance =Actual FOH-Standard FOH

(24444+28542+45540)-98568

=98526-98568=42 favourable

Standard fixed overhead = standard labour hour * Standard applied rate

=17600/3200*3600=[19800]*[(25408+40480+21728)/17600]

=19800*4.98=98568

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.