PROBLEM 1 (30 Points) The Ball Crusher Company makes high performance golf drive

Question

PROBLEM 1 (30 Points) The Ball Crusher Company makes high performance golf drivers. The standard cost for a driver is as follows: Direct Material .5 lbs a s20 Direct Labor 3 hrs S13 Variable Factory Overhead S2 per DLH Fixed Factory Overhead SI per DLH Total S10 S39 S 6 S 3 S58 The company had budgeted S108,000 of fixed factory overhead and 108,000 direct labor hours for the year. The company produced 36,200 drivers and incurred 108,750 direct labor hours during the year. Actual costs and other data are as follows: Direct Material-- Purchased 20,000 Ibs@ $20.40; issued to production 18,000 lbs. Direct labor cost- $1,318,900 Variable Overhead Cost- S206,000 Fixed Factory Overhead-S111,500 REQUIRED: Calculate a. b. c. d. Material Usage(Quantity) and Cost (Price) Variances Labor Efficiency(Quantity) and Rate (Price) Variances Variable Overhead Efficiency(Quantity) and Rate (Price) Variances Fixed Overhead Budget Spending (Budget) Variance and Volume Variance

Explanation / Answer

BALL CRUSHER COMPANY a) Material Cost (Price) Variance = (Actual price-Standard price)*Actual quantity = (20.40-20)*20000 = 8000 [U] Material Usage variance = (Actual quantity used-Standard quantity)*Standard price = (18000-36200*0.5)*20 = 2000 [F] b) Labor rate variance = (Actual rate-Standard rate)*Actual hours = (1318900/108750-13)*108750 = 94850 [F] Labor efficiency variance = (Actual hours-Standard hours)*Standard rate = (108750-36200*3)*13 = 1950 [U] c) VOH rate variance = (Actual VOH rate-Standard VOH rate)*Actual hours = (206000/108750-2)*108750 = 11500 [F] VOH efficiency variance = (Actual hours-Standard hours)*Standard VOH rate = (108750-36200*3)*2 = 300 [U] d) Fixed overhead budget spending variance = Actual fixed overhead-Budgeted fixed overhead. =111500-108000 = 3500 [U] Fixed overhead volume variance = Budgeted overhead-Standard fixed overhead assigned = 108000-36200*3 = 600 [F]

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