3 Gripper Tire Co. manufactures automobile tires. Standard costs and actual cost
ID: 2582494 • Letter: 3
Question
3 Gripper Tire Co. manufactures automobile tires. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 4,160 tires were as follows Standard Costs Actual Costs Direct materials Direct labor Factory overhead 100,000 lbs. at $6.40 2,080 hrs. at $15.75 Rates per direct labor hr, based on 100% of normal capacity of 2,000 direct labor hrs: 101,000 lbs. at $6.50 2,000 hrs. at $15.40 Variable cost, $4.00 Fixed cost, $6.00 $8,200 variable cost $12,000 fixed cost Each tire requires 0.5 hour of direct labor. Reauired: Sheet1Sheet2 Sheet3 Type here to searchExplanation / Answer
DIRECT MATERIAL VARIANCES
$
$
$
ACTUAL COST
LESS:
656500
10,100 ADV
PRICE
VARIANCE
ACTUAL WEIGHT X STD COST
LESS:
101000 X 6.40
646400
STD WEIGHTX
STD COST
100000X
6.40
640000
USAGE VARIANCE
6400 ADV
TOTAL VARIANCE
16500
DIRECT LABOUR VARIANCES
$
$
$
ACTUAL COST
LESS:
2000 X
15,40
30800
EXPENDITURE
VARIANCE
700 FAV
ACTUAL HOURS X STD COST
LESS:
2000 X
15.75
31500
STD HOURS X
STD COST
2080 X
15.75
32760
EFFICIENCY
VARIANCE
1260 FAV
TOTAL VARIANCE
1960 FAV
VARIABLE OVERHEAD VARIANCES
$
$
$
ACTUAL COST
LESS:
8200
EXPENDITURE
VARIANCE
200 ADV
ACTUAL HOURS X STD COST
LESS:
2000
X 4
8000
STD HOURS X
STD COST
2080 X
4
8320
EFFICIENCY
VARIANCE
320 FAV
TOTAL VARIANCE
120 FAV
FIXED OVERHEAD VARIANCES
$
$
$
ACTUAL COST
LESS:
12000
BUDGETED OVERHEADS
LESS:
12000
ACTUAL HOURS X STD COST
LESS:
2000 X
6
12000
STD HOURS X
STD COST
4160 X .5 X 6
12480
EFFICIENCY
480
FAV
TOTAL VARIANCE
480 FAV
IMPACT OF VARIANCES ON INCOME STATEMENT
$ ADV
$ FAV
DM
PRICE
10100
USAGE
6500
DL
RATE
700
EFFICIENCY
1260
VARIABLE OH
EXPENDITURE
200
EFFICIENCY
320
FIXED OH
EXPENDITURE
0
480
EFFICIENCY
OVERALL
TOTAL VARIANCE
16800
2760
$14,040 ADV WILL REDUCE PROFITS
DIRECT MATERIAL VARIANCES
$
$
$
ACTUAL COST
LESS:
656500
10,100 ADV
PRICE
VARIANCE
ACTUAL WEIGHT X STD COST
LESS:
101000 X 6.40
646400
STD WEIGHTX
STD COST
100000X
6.40
640000
USAGE VARIANCE
6400 ADV
TOTAL VARIANCE
16500
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