Please answer 1 2 3 and 4. Krane Company has a standard costing system and keeps
ID: 2598172 • Letter: P
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Please answer 1 2 3 and 4.
Krane Company has a standard costing system and keeps all its costs up to date. The s beach towels which are made in a single department. The standard variable coats for are as follows company's main product one beach towel (uni Direct materials (3 yards at $1.00 per yard) Direct labor (1/2 hour at $9.00 per hour) Variable overhead (1/2 hour @ $5.00 per direct labor hour) Standard variable cost per unit $3.00 4.50 2.50 $10.00 The company's normal capacity is 10,000 direct labor hours. Its budgeted fixed overhead costs for the year were $24,000. During the year, it produced and sold 22,000 beach towels and it purchased 66,250 yards of direct materials; the purchase cost was $0.99 per yard. The average labor rate was $9.10 per hour, and 10,900 direct labor hours were worked. The company's actual variable overhead costs for the year were $55,100, and its fixed costs were $24,500 Using the data given, compute the following using formulas or diagram form 1. Direct materials cost variances: a. Direct materials price varianceExplanation / Answer
Formula = Variance 1a. Direct materials price variance (AC - SC) x AQ = $ 662.50 F (0.99 - 1.00) x 66250 1b. Direct materials quantity variance (AQ - SQ) x SC = $ 250 U (66250 - 66000) x 1.00 1c. Total direct materials cost variance = $ 412.50 F 2a. Direct labor rate variance (AC - SC) x AQ = $ 1,090 U (9.10 - 9.00) x 10900 2b. Direct labor efficiency variance (AQ - SQ) x SC = $ 900 F (10900 - 11000) x 9.00 2c. Total direct labor cost variance = $ 190 U 3a. Variable overhead spending variance Actual VOH - (SC x AQ) = $ 600 U 55100 - (5.00 x 10900) 3b. Variable overhead efficiency variance (AQ - SQ) x SC = $ 500 F (10900 - 11000) x 5.00 3c. Total variable overhead variance = $ 100 U 4a. Fixed overhead budget variance Actual FOH - Budgeted FOH = $ 500 U 24500 - 24000 4b. Fixed overhead volume variance Budgeted FOH - Allocated FOH = $ 2,400 F 24000 - (11000 x $2.40) 4c. Total fixed overhead variance = $ 1,900 F
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