Garrison Manufacturing has the following standard cost sheet for one of its products: Direct materials (5 m@ $6) $30 Direct labour (1.5 hours @ $10) 15 Variable overhead (1 hour @$7) Fixed overhead (2 hours @ $3) Standard unit cost $8 *Rate based on expected activity of 12.000 hours. During the most recent year, the following actual results were recorded: Production 13,000 units Fixed overhead $36,000 Variable overhead $60,000 Direct materials (62,500 m purchased) $382,500 Direct labour (15,900 hours) $182,580 Required: Compute the following variances: 1. Direct materials price, usage and total direct material variances 2. Direct labour rate, efficiency and total direct labour variances Provide the formula and detailed calculations, do not just write the answer. 6.
Garrison Manufacturing has the following standard cost sheet for one of its products: Direct materials (5 m@ $6) $30 Direct labour (1.5 hours @ $10) 15 Variable overhead (1 hour @$7) Fixed overhead (2 hours @ $3) Standard unit cost $8 *Rate based on expected activity of 12.000 hours. During the most recent year, the following actual results were recorded: Production 13,000 units Fixed overhead $36,000 Variable overhead $60,000 Direct materials (62,500 m purchased) $382,500 Direct labour (15,900 hours) $182,580 Required: Compute the following variances: 1. Direct materials price, usage and total direct material variances 2. Direct labour rate, efficiency and total direct labour variances Provide the formula and detailed calculations, do not just write the answer. 6.
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter4: Accounting For Factory Overhead
Section: Chapter Questions
Problem 14P: Abbey Products Company is studying the results of applying factory overhead to production. The...
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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.
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