John’s Surfboards manufactures fibreglass surfboards. The standard cost of direct materials and direct manufacturing labour is $100 per board. This includes 20 kg of direct materials, at the budgeted price of $2 per kilogram, and 5 hours of direct manufacturing labour, at the budgeted rate of $12 per hour. Following are additional data for the month of July: Units completed 6,000 units Direct material purchases 150,000 kilograms Cost of direct material purchases $292,500 Actual direct manufacturing labour-hours 32,000 hours Actual direct labour cost $368,000 Direct material efficiency variance $12,500 U There were no beginning inventories. Required: Compute direct manufacturing labour variances for July. Compute the actual kilograms of direct materials used in production in July. Calculate the actual price per kilogram of direct material purchased. Calculate the direct materials price variance.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
John’s Surfboards manufactures fibreglass surfboards. The
|
Units completed |
6,000 units |
|
Direct material purchases |
150,000 kilograms |
|
Cost of direct material purchases |
$292,500 |
|
Actual direct manufacturing labour-hours |
32,000 hours |
|
Actual direct labour cost |
$368,000 |
|
Direct material efficiency variance |
$12,500 U |
There were no beginning inventories.
Required:
- Compute direct manufacturing labour variances for July.
- Compute the actual kilograms of direct materials used in production in July.
- Calculate the actual price per kilogram of direct material purchased.
- Calculate the direct materials price variance.
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