Cost per Output Unit $ 20.00 Input 5 lb. at $4 per Ib. 4 hrs. at $16 per hr. Direct materials Direct manufacturing labor Manufacturing overhead: 64.00 $8 per DLH $9 per DLH Variable 32.00 Fixed 36.00 Standard manufacturing cost per output unit $152.00 The denominator level for total manufacturing overhead per month in 2017 is 37,000 direct manufacturing labor-hours. Beal's budget for January 2017 was based on this denominator level. The records for January indicated the following: Direct materials purchased 40,300 lb. at $3.80 per Ib. Direct materials used 37,300 lb. Direct manufacturing labor Total actual manufacturing overhead (variable and fixed) Actual production 31,400 hrs. at $16.25 per hr. S650,000 7,600 output units Required 1. Prepare a schedule of total standard manufacturing costs for the 7,600 output units in January 2017. 2. For the month of January 2017, compute the following variances, indicating whether each is favorable (F) or unfavorable (U): a. Direct materials price variance, based on purchases b. Direct materials efficiency variance c. Direct manufacturing labor price variance d. Direct manufacturing labor efficiency variance e. Total manufacturing overhead spending variance f. Variable manufacturing overhead efficiency variance g. Production-volume variance
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Review of Chapters 7 and 8, 3-
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