Larned Company makes a storage box using metal. The company uses a standard costing system. Variable overhead is allocated on the basis of direct material usage (pounds). Overhead is allocated to units based on expected production of 15,200 units. Larned maintains a materials inventory, so the amount of material used is not necessarily the same as the amount of material purchased in any one month.The standard cost sheet for a single box follows:Direct materialDirect laborVariable overheadFixed overhead0.5 pound @ $80.2 hours @ $300.5 pound @ $4$ 4.006.002.003.00$ 15.00March financial results show that the average purchase price of metal was $9.05 per pound. The purchase price variance was $1,710The variable overhead efficiency variance was $1,370 favorable. Good output produced totaled 13,700 units.Required:a. How many pounds of metal were purchased in March?b. What was the direct materials efficiency variance in March?Note: Indicate the effect of this variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.c. How many pounds of metal were used in March?a. Metals purchasedEfficiency variancec. Metals usedpoundspounds Larned Company makes a storage box using metal. The company uses a standard costing system. Variable overhead is allocated onthe basis of direct material usage (pounds). Overhead is allocated to units based on expected production of 15,200 units. Larnedmaintains a materials inventory, so the amount of material used is not necessarily the same as the amount of material purchased in anyone month.The standard cost sheet for a single box follows:0.5 pound @ $80.2 hours @ $300.5 pound @ $4Direct materialDirect laborVariable overheadFixed overheadMarch financial results show that the average purchase price of metal was $9.05 per pound. The purchase price variance was $1,710.The variable overhead efficiency variance was $1,370 favorable. Good output produced totaled 13,700 units.Required:a. How many pounds of metal were purchased in March?b. What was the direct materials efficiency variance in March?Note: Indicate the effect of this variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not selecteither option.c. How many pounds of metal were used in March?a. Metals purchasedb. Efficiency variancec. Metals used$4.006.002.003.00$15.00poundspounds

The variance is the difference between the standard and actual cost data. The variance can be…

Answered: Larned Company makes a storage box…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter9: Standard Costing: A Functional-based Control Approach

Section: Chapter Questions

Problem 28P: Haversham Corporation produces dress shirts. The company uses a standard costing system and has set...

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Larned Company makes a storage box using metal. The company uses a standard costing system. Variable overhead is allocated on the basis of direct material usage (pounds). Overhead is allocated to units based on expected production of 15,200 units. Larned maintains a materials inventory, so the amount of material used is not necessarily the same as the amount of material purchased in any one month. The standard cost sheet for a single box follows: Direct material Direct labor Variable overhead Fixed overhead 0.5 pound @ $8 0.2 hours @ $30 0.5 pound @ $4 $ 4.00 6.00 2.00 3.00 $ 15.00 March financial results show that the average purchase price of metal was $9.05 per pound. The purchase price variance was $1,710 The variable overhead efficiency variance was $1,370 favorable. Good output produced totaled 13,700 units. Required: a. How many pounds of metal were purchased in March? b. What was the direct materials efficiency variance in March? Note: Indicate the effect of this variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. c. How many pounds of metal were used in March? a. Metals purchased Efficiency variance c. Metals used pounds pounds

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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