nesville Corporation manufactures and sells a preservative used in food and drug manufacturing. The company carries no entories. The master budget calls for the company to manufacture and sell 122,000 liters at a budgeted price of $240 per liter this ar. The standard direct cost sheet for one liter of the preservative follows. irect materials (2 pounds @ $15) (0.5 hours @ $46) $30 irect labor 23 riable overhead is applied based on direct labor hours. The variable overhead rate is $130 per direct-labor hour. The fixed overhead e (at the master budget level of activity) is $65 per unit. All non-manufacturing costs are fixed and are budgeted at $2.3 million for coming year. the end of the year, the costs analyst reported that the sales activity variance for the year was $732,000 unfavorable. e following is the actual income statement (in thousands of dollars) for the year. ales revenue ess variable costs Direct materials Direct labor $28,138 2,998 2,660 7,130 Variable overhead $12,788 $15,350 Total variable costs Contribution margin Less fixed costs Fixed manufacturing overhead Non-manufacturing costs Total fixed costs 1,160 1,340 $ 2,500 $12,850 "perating profit ring the vear, the company purchased 198.000 pounds of material and emploved 51.400 hours of direct labor.
nesville Corporation manufactures and sells a preservative used in food and drug manufacturing. The company carries no entories. The master budget calls for the company to manufacture and sell 122,000 liters at a budgeted price of $240 per liter this ar. The standard direct cost sheet for one liter of the preservative follows. irect materials (2 pounds @ $15) (0.5 hours @ $46) $30 irect labor 23 riable overhead is applied based on direct labor hours. The variable overhead rate is $130 per direct-labor hour. The fixed overhead e (at the master budget level of activity) is $65 per unit. All non-manufacturing costs are fixed and are budgeted at $2.3 million for coming year. the end of the year, the costs analyst reported that the sales activity variance for the year was $732,000 unfavorable. e following is the actual income statement (in thousands of dollars) for the year. ales revenue ess variable costs Direct materials Direct labor $28,138 2,998 2,660 7,130 Variable overhead $12,788 $15,350 Total variable costs Contribution margin Less fixed costs Fixed manufacturing overhead Non-manufacturing costs Total fixed costs 1,160 1,340 $ 2,500 $12,850 "perating profit ring the vear, the company purchased 198.000 pounds of material and emploved 51.400 hours of direct labor.
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter8: Standard Cost Accounting—materials, Labor, And Factory Overhead
Section: Chapter Questions
Problem 18E: Calculating factory overhead: two variances Monrovia Manufacturing Inc. normally produces 10,000...
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Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Question
Transcribed Image Text:Exercise 16-36 (Algo) Variable Cost Variances (LO 16-5)
Paynesville Corporation manufactures and sells a preservative used in food and drug manufacturing. The company carries no
inventories. The master budget calls for the company to manufacture and sell 122,000 liters at a budgeted price of $240 per liter this
year. The standard direct cost sheet for one liter of the preservative follows.
(2 pounds @ $15)
(0.5 hours @ $46)
Direct materials
$30
Direct labor
23
Variable overhead is applied based on direct labor hours. The variable overhead rate is $130 per direct-labor hour. The fixed overhead
rate (at the master budget level of activity) is $65 per unit. All non-manufacturing costs are fixed and are budgeted at $2.3 million for
the coming year.
At the end of the year, the costs analyst reported that the sales activity variance for the year was $732,000 unfavorable.
The following is the actual income statement (in thousands of dollars) for the year.
Sales revenue
$28,138
Less variable costs
Direct materials
2,998
2,660
7,130
$12,788
$15,350
Direct labor
Variable overhead
Total variable costs
Contribution margin
Less fixed costs
Fixed manufacturing overhead
Non-manufacturing costs
Total fixed costs
1,160
1,340
$ 2,500
Operating profit
$12,850
During the year, the company purchased 198,000 pounds of material and employed 51,400 hours of direct labor.
Transcribed Image Text:Required:
a. Compute the direct material price and efficiency variances.
b. Compute the direct labor price and efficiency variances.
c. Compute the variable overhead price and efficiency variances.
(For all requirements, enter your answers in whole dollars. Indicate the effect of each variance by selecting "F" for favorable, or
"U" for unfavorable. If there is no effect, do not select either option.)
a.
Direct materials:
Price variance
Efficiency variance
b.
Direct labor:
Price variance
Efficiency variance
с.
Variable overhead:
Price variance
Efficiency variance
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