Flandro Company uses a standard cost system and sets its predetermined overhead
ID: 2536074 • Letter: F
Question
Flandro Company uses a standard cost system and sets its predetermined overhead rate on the basis of direct labor-hours. The following data are taken from the company's planning budget for the current year: Denominator activity (direct labor-hours) Variable manufacturing overhead cost Fixed manufacturing overhead cost 13,000 39,650 $110,500 The standard cost card for the company s only product is given below Standard Quantity or Hours Standard Price or Rate 4 yards1.85 per yard 7.40 Standard Cost Inputs Direct materials Direct labor Manufacturing overhead Total standard cost per unit hours 8.25 per hou 2 hours 11.55 per hour 16.50 23.10 47.00 During the year, the company produced 6,760 units of product and incurred the following actual results Materials purchased, 42,900 yards at $1.80 per yard Materials used in production (in yards) Direct labor cost incurred, 14,000 hours at $7.95 per hour Variable manufacturing overhead cost incurred Fixed manufacturing overhead cost incurred $ 77,220 27,900 111,300 $40,450 86,100Explanation / Answer
1)Standard Cost Card
2)Material Price Variance =Actual Quantity purchased*(Standard Price-Actual Price)
=42,900*($1.85-$1.80)=$2,145(F)
Material Quantity Variance=Standard Price*(Standard Quantiy for Actual production - Actual Qauntity Consumed)
=$1.85((4 yards*6760 units)-27900)=$1,591(U)
Labor Rate Variance =Actual Hours Used*(Standard Rate-Actual Rate)
=14,000*($8.25-$7.95)=$4,200(F)
Labor Efficiency Variance=Standard Rate*(Standard Hours for Actual production - Actual Hours Used)
=$8.25((2 hours *6760 units)-14,000)=$3,960(U)
3)Variable Rate Overhead Variance=Actual Overhead - Actual Overhead hours*Standard Rate
=$40,450-14000 hours*$3.05=$2,250(F)
Variable Overhead Efficiency Variance=$3.05(14,000 hoours-(2 hours *6760 units))=$1,464(U)
Fixed Overhead Budget=Actual OH-Standard OH=$86,100-$110,500=$24,400(F)
Fixed OH volume Variance=((6,760 units*2hours)-13000 hours)*$8.5=$4,420(F)
Direct Materials 4 yards at $1.85 per yard $7.40 Direct labor 2 DLHs $8.25 per DLH $16.50 Variable Manufacturing Overheads 2 DLHs $3.05 per DLH $6.10 Fixed Manufacturing Overheads 2 DLHs $8.5 per DLH $17 Standard Cost per unit $47Related Questions
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