Your next-door neighbor recently began a new job as assistant controller for Con
ID: 2578003 • Letter: Y
Question
Your next-door neighbor recently began a new job as assistant controller for Conun As her first scheduled to present the report to management the next morning, so she brought it home to review. As the t Presen report was an object to be fetched. The pup made a flying leap and got a firm grip on the houg torn to bits. Only certain data are legible on the report. This information follows: n Chapters g Conclu assignment. she prepared a performance report for March. She was Data 1-5) variance: chasing the dog around the block you managed to wrest the report from its teeth. Neediess antity hter to say, it was the backyard, she decided to show you the report she had prepared. Unfortunately. your do CONUNDRUM CORPORATION Performance Report for the Month of March Direct Material Variable Fixed Overhead Overhead Direct Standard allowed cost given actual output (? kilograms at (2 hours at $18 per$21 per hour) kilogram) Flexible overhead budget Actual cost $283,500 (14,000 kilograms at $20.25 per kilogram) (8,800 hours at? per hour) Direct-material price variance .. Direct-material quantity variance. Direct-labor rate variance Direct-labor efficiency varianc Variable-overhead spending $9,000 U $13,200 U 4,200 F variance $3,960 U Variable-overhead efficiency variance 1,800 F Fixed-overhead budget variance $4,875 In addition to the fragmentary data still legible on the performance report, your neighbor happe to remember the following facts. Planned production of Conundrum's sole product was 500 units more than the actual productiol. All of the direct material purchased in March was used in production There were no beginning or ending inventories. . . Variable and fixed overhead are applied on the basis of direct-labor hours. The fixed overhead rae is $6.00 per hour.Explanation / Answer
Working Notes :-
WN 1) Direct Material Quantity Variance = (Standard Qty - Actual Qty)Standard Price per unit
$9,000 U = (SQ - 14,000 kgs)$18
(-)$9,000 = $18*SQ - $252,000
$18*SQ = $252,000-$9,000,
Std Qty = $243,000/$18 = 13,500 units
WN 2) Labour Efficiency Variance = (Standard Hours - Actual Hours)Standard rate
$4,200 F = (SH - 8,800 hours)$21
$4,200 = SH*$21 - $184,800
SH*$21 = $184,800-$4,200
Std Hours = $180,600/$21 = 8,600 hours
WN 3) Actual Production = Total standard hours for actual output/Std. hour per unit = 8,600 hours/2 hours = 4,300 units
Requirements of the Question:
1) Planned Production = Actual Production + 500 units = 4,300 units+500 units = 4,800 units
2) Actual production = 4,300 units (WN 3 above)
3) Fixed Overhead Budget Variance = Budgeted Fixed Overhead - Actual Fixed Overhead
$4,875 U = (Budgeted hours*Budgeted Rate) - Actual Fixed Overhead
(-)$4,875 = (4,800 units*2 hours*$6) - Actual Fixed Overhead
Actual Fixed Overhead = $57,600 + $4,875 = $62,475
4) Total Standard direct labour hours = 4,300 units*2 hours per unit = 8,600 hours (WN 2)
5) Labour Rate Variance = (Std rate - Actual rate)Actual Hours
$13,200 U = ($21 - Actual rate)8,800 hours
(-)$13,200 = $184,800 - 8,800 hours*Actual rate
8,800*AR = $184,800+$13,200
Actual direct labour rate = $198,000/8,800 = $22.5
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.