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Computing and journalizing standard cost variances McKnight manufactures coffee mugs that it sells to other companies for customizing with their own logos. McKnight prepares flexible budgets and uses a standard cost system to control manufacturing costs. The standard unit cost of a coffee mug is based on static budget volume of 59,800 coffee mugs per month: Direct Materials (.2 lbs. @ $0.25 per Ib.) $ 0.05 Direct Labor (3 minutes @ $0.11 per minute) 0.33 Manufacturing Overhead: Variable (3 minutes @ $0.06 per minute) $ 0.18 Fixed (3 minutes @ $0.15 per minute) 0.45 0.63 Total Cost Per Coffee Mug $ 1.01 Actual cost and production information for July 2020 follow: a. Actual production and sales were 62,500 coffee mugs. b. Actual direct materials usage was 10,000 lbs. at an actual cost of $0.17 per Ib. Actual direct labor usage of 198,000 minutes at a cost of $25,740. C. d. Actual overhead cost was $8,500 variable and $32,100 fixed. e. Selling and administrative costs were $110,000.

Computing and journalizing standard cost variances McKnight manufactures coffee mugs that it sells to other companies for customizing with their own logos. McKnight prepares flexible budgets and uses a standard cost system to control manufacturing costs. The standard unit cost of a coffee mug is based on static budget volume of 59,800 coffee mugs per month: Direct Materials (.2 lbs. @ $0.25 per Ib.) $ 0.05 Direct Labor (3 minutes @ $0.11 per minute) 0.33 Manufacturing Overhead: Variable (3 minutes @ $0.06 per minute) $ 0.18 Fixed (3 minutes @ $0.15 per minute) 0.45 0.63 Total Cost Per Coffee Mug $ 1.01 Actual cost and production information for July 2020 follow: a. Actual production and sales were 62,500 coffee mugs. b. Actual direct materials usage was 10,000 lbs. at an actual cost of $0.17 per Ib. Actual direct labor usage of 198,000 minutes at a cost of $25,740. C. d. Actual overhead cost was $8,500 variable and $32,100 fixed. e. Selling and administrative costs were $110,000.

Principles of Cost Accounting
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter8: Standard Cost Accounting—materials, Labor, And Factory Overhead
Section: Chapter Questions
Problem 6E: Computing materials variances D-List Calendar Co. specializes in manufacturing calendars that depict...
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Computing and journalizing standard cost variances McKnight manufactures coffee mugs that it sells to other companies for customizing with their own logos. McKnight prepares flexible budgets and uses a standard cost system to control manufacturing costs. The standard unit cost of a coffee mug is based on static budget volume of 59,800 coffee mugs per month: Direct Materials (0.2 lbs. @ $0.25 per Ib.) $ 0.05 Direct Labor (3 minutes @ $0.11 per minute) 0.33 Manufacturing Overhead: Variable (3 minutes @ $0.06 per minute) $ 0.18 Fixed (3 minutes @ $0.15 per minute) 0.45 0.63 Total Cost Per Coffee Mug $ 1.01 Actual cost and production information for July 2020 follow: a. Actual production and sales were 62,500 coffee mugs. b. Actual direct materials usage was 10,000 lbs. at an actual cost of $0.17 per Ib. Actual direct labor usage of 198,000 minutes at a cost of $25,740. d. Actual overhead cost was $8,500 variable and $32,100 fixed. e. Selling and administrative costs were $110,000. c.
Transcribed Image Text:Computing and journalizing standard cost variances McKnight manufactures coffee mugs that it sells to other companies for customizing with their own logos. McKnight prepares flexible budgets and uses a standard cost system to control manufacturing costs. The standard unit cost of a coffee mug is based on static budget volume of 59,800 coffee mugs per month: Direct Materials (0.2 lbs. @ $0.25 per Ib.) $ 0.05 Direct Labor (3 minutes @ $0.11 per minute) 0.33 Manufacturing Overhead: Variable (3 minutes @ $0.06 per minute) $ 0.18 Fixed (3 minutes @ $0.15 per minute) 0.45 0.63 Total Cost Per Coffee Mug $ 1.01 Actual cost and production information for July 2020 follow: a. Actual production and sales were 62,500 coffee mugs. b. Actual direct materials usage was 10,000 lbs. at an actual cost of $0.17 per Ib. Actual direct labor usage of 198,000 minutes at a cost of $25,740. d. Actual overhead cost was $8,500 variable and $32,100 fixed. e. Selling and administrative costs were $110,000. c.
Requirements 1. Compute the cost and efficiency variances for direct materials and direct labor. 2. Journalize the usage of direct materials and the assignment of direct labor, including the related variances. 3. For manufacturing overhead, compute the variable overhead cost and efficiency variances and the fixed overhead cost and volume variances.
Transcribed Image Text:Requirements 1. Compute the cost and efficiency variances for direct materials and direct labor. 2. Journalize the usage of direct materials and the assignment of direct labor, including the related variances. 3. For manufacturing overhead, compute the variable overhead cost and efficiency variances and the fixed overhead cost and volume variances.
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