Don Johnson is the management accountant for Cari-Blocks (CB), which manufactures specialty blocks. CB uses two direct cost categories: direct materials and direct manufacturing labour. Johnson feels that manufacturing overhead is most closely related to material usage. Therefore, CB allocates manufacturing overhead to production based upon pounds of materials used. At the beginning of 2021, CB budgeted annual production of 200,000 blocks and adopted the following standards for each block: Direct materials 0.5 lb. @ $12/lb. $ 6.00 Direct manufacturing labour 1.4 hours @ $20/hour 28.00 Manufacturing overhead: Variable $6/lb. 0.5 lb. 3.00 Fixed $15/lb. 0.3 lb. 4.50 Standard cost per block $41.50 Actual results for April 2021 were as follows: Production 24,000 blocks Direct materials purchased 12,000 lb. at $13/lb. Direct materials used 11,450 lb. Direct manufacturing labour 38,000 hours for $798000 Variable manufacturing overhead $68,150 Fixed manufacturing overhead $155,000 CALCULATE: .a. Direct manufacturing labour price variance b. Direct manufacturing labour efficiency variance c. Variable manufacturing overhead spending variance
Don Johnson is the
specialty blocks. CB uses two direct cost categories: direct materials and direct
manufacturing labour. Johnson feels that manufacturing
material usage. Therefore, CB allocates manufacturing overhead to production based upon
pounds of materials used.
At the beginning of 2021, CB budgeted annual production of 200,000 blocks and adopted the
following standards for each block:
Direct materials 0.5 lb. @ $12/lb. $ 6.00
Direct manufacturing labour 1.4 hours @ $20/hour 28.00
Manufacturing overhead:
Variable $6/lb. 0.5 lb. 3.00
Fixed $15/lb. 0.3 lb. 4.50
Actual results for April 2021 were as follows:
Production 24,000 blocks
Direct materials purchased 12,000 lb. at $13/lb.
Direct materials used 11,450 lb.
Direct manufacturing labour 38,000 hours for $798000
Variable manufacturing overhead $68,150
Fixed manufacturing overhead $155,000
CALCULATE:
.a. Direct manufacturing labour price variance
b. Direct manufacturing labour efficiency variance
c. Variable manufacturing overhead spending variance
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