Case 23.2 Boxes Company has collected the following data for one of its products
ID: 2600278 • Letter: C
Question
Case 23.2 Boxes Company has collected the following data for one of its products Direct materials standard (3 pounds @$1/1b.) Direct materials flexible budget variance-unfavorable Actual direct materials used Actual finished goods produced $3 per finished good $14,000 100,000 pounds 25,000 units 1) Refer to Case 23.2. What is the total actual cost of the direct materials used? 2) Refer to Case 23.2. What is the actual cost of the direct materials used per pound? 3) Refer to Case 23.2. How much is the direct materials efficiency variance? 4) Refer to Case 23.2. How much is the direct materials price variance? 5) Jennifer Gibson Company budgeted 4,000 pounds of direct materials costing $7.00 per pound to make 8,000 units of product. The company actually used 4,200 pounds costing S6.50 per pound to make the 8,000 units. What is the direct materials efficiency variance? 6) Professional Woodworkers budgeted 3 hours of direct labor per unit at $8.50 per hour to produce 400 units of product. The 400 units were completed using 1,140 hours at $8.75 per hour. What is the direct labor price variance?Explanation / Answer
23.2)
1)
DM Efficiency Variance = $1(100,000 - (3 x 25,000)) = $ 25,000 U.
DM Price Variance = $14,000U (flexible budget variance) – 25,000 U= $ 11,000 F
Total Actual Cost of DM used = $ 100,000 (1 x 100,000) -11,000 = $ 89,000
2)
Direct materials flexible budget = 25,000 units x $3 = 75,000
Actual Direct Material = 75,000 + 14,000 = 89,000
Actual cost of direct material per pound = $89,000 / 100,000 = $0.89 per pound
3) Calculations: = $1 (100,000 – (3 x 25,000)) Unfavorable
4) DM Price Variance = $14,000U (flexible budget variance) – 25,000 U= $ 11,000 F
5) Direct material efficiency variance = (4200 – 4000) x 7 = 1400 U
(Actual material used - Standard material used) x standard price
6) Direct Labor Price Variance = (8.75 – 8.50) x 1140 = $285 U
( Actual Cost - Standard Cost ) x Nuymber of labor hours
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