Wolverine Inc. had the following standards for their production of a specialty d

Question

Wolverine Inc. had the following standards for their production of a specialty desk designed to work with laptops, tablets and smartphones. The standards are based on 500,000 labor hours. Materials: 6 lbs. @ $5 per lb. Labor: 10 hrs.@ $7 per hr. Fixed OH: $500,000 Variable OH: $5 per DL hr Fixed OH was calculated based on an estimated production level of 250,000 hours. During the month of March, the following occurred: Production: 30,000 Materials Purchased: 200,000 lbs @ $5.15 per lb. Materials Used 160,000 lbs Direct Labor 320,000 hrs @ $6.80 per hr Fixed OH $512,000 Standard Budgeted Actual Units 25,000 30,000 30,000 Fixed Overhead $ 500,000 $ 500,000 $ 512,000 Variable Overhead $1,250,000* $1,500,000** $1,450,000 Total Overhead $1,750,000 $2,000,000 $1,962,000 The 250,000 standard units was found by taking the 250,000 expected hours to be worked and dividing by the 10 hours per unit to arrive at estimated or standard production of 25,000 units. Predetermined overhead application rate is $7 per DL hour found by taking the $5 var cost per DL hour + $2 fixed cost per DL hour. *$5 per hr x 10 hrs per unit x 25,000 units **$5 per hr x 10 hrs per unit x 30,000 units Find: 1. Standard Cost 2. Materials Price Variance 3. Materials Usage Variance 4. Labor Rate Variance 5. Labor Efficiency Variance 6. Total Labor Variance 7. Overhead Budget Variance 8. Overhead Volume Variance 9. Total Overhead Variance

Wolverine Inc. had the following standards for their production of a specialty desk designed to work with laptops, tablets and smartphones. The standards are based on 500,000 labor hours. Materials: 6 lbs.$5 per lb. Labor: Fixed OH: ,00 Variable OH: $5 per DL bt 10 hrs.@ $7 per hr Fixed OH was calculated based on an estimated production level of 250,000 hours. During the month of March, the following occurred: Materials Purchased: Materials Used Direct Labor Fixed OH 30,000 200,000 lbs @$5.15 per lb. 160,000 lbs 320,000 brs $6.80 per br $512,000 Standard 25,000 Budgeted 30,000 Actua Units Fixed Overhea Variable Overhead Total Overhead 30,000 500,000 1,250,000 1,750,000 500,000 1,500,000 2,000,000 512,000 1,450,000 1,962,000 The 250,000 standard units was found by taking the 250,000 expected hours to be worked and dividing by the 10 hours per unit to arrive at estimated or standard production of 25,000 units. Predetermined overhead application rate is $7 per DL hour found by taking the $5 yar cost per DL hour $2 fixed cost per DL hour *$5 per b[x 10 br per unit x 25,000 units *$5 per br x 10 brs per unit x 30,000 units

Explanation / Answer

1.Standard cost

Fixed overhead rate :Esitmated fixed overhead /estimated direct labor hours

     500000/250000.

= $ 2 per DLH..

2).

Material price variance = ( actual quantity purchased (actual rate - standard rate) )

                                       = (200000 [ 5.15 - 5 ])

                                       =30000unfavorable

3.

material usage variance = standard rate [ actual quantity used - standard quantity ]

                                       = 5 [ 160000 - (30000 * 6 ) ]

                                       = 5 [160000 - 180000]

                                       =5 * - 20000

                                        = -100000favorable

4.

labor rate variance = actual hours ( actual rate - standard rate )

                                = 320000 (6.8 -7)

                               =    320000 * - 0.2

                              =     -64000favorable

Standard cost Direct material (6 * 5) 30 Direct labour (10 * 7) 70 variable over head (10 * 5 ) 50 fixed over head (10 * 2 ) 20 Standard cost 170

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

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