The following information relates to questions Moon Phase Ltd are a company manufacturing sails for Scorpion sail boats. The company expects production and sales in July 2021 to be 2,000 sails. The budget for these 2,000 sails is detailed below with materials and labour being variable costs and overheads being a mixed cost. Materials Labour Overhead 150,000 96,000 65,000 Each sail is expected to use 7.5 square metres of fabric and 4 hours of labour. The overhead for August, which is based on production and sales of 1,500 units, is £55,000. In July 3,000 units are produced. 22,000 square metres of material are used at a cost of £231,000 and 11,550 hours of labour are used at a cost of £12.50 per hour 1. The flexed budget for 3,000 sails is: (a) Materials £150,000, Labour £96,000 and Overhead £65,000 (b) Materials £225,000, Labour £144,000 and Overheads £85,000 (c) Materials £225,000 Labour £144,000 and Overheads £97,500 (d) Materials £225,000 Labour £144,000 and Overheads £110,000 The material price variance for the month of July is: (a) £11,000 A (b) £11,000 F (c) £6,000 F (d) £6,000 A The material usage variance for the month of July is: (a) £5,000 A (b) (c) (d) £6,000 A £5,000 F 6,000 F

The following information relates to questions Moon Phase Ltd are a company manufacturing sails for Scorpion sail boats. The company expects production and sales in July 2021 to be 2,000 sails. The budget for these 2,000 sails is detailed below with materials and labour being variable costs and overheads being a mixed cost. Materials Labour Overhead 150,000 96,000 65,000 Each sail is expected to use 7.5 square metres of fabric and 4 hours of labour. The overhead for August, which is based on production and sales of 1,500 units, is £55,000. In July 3,000 units are produced. 22,000 square metres of material are used at a cost of £231,000 and 11,550 hours of labour are used at a cost of £12.50 per hour 1. The flexed budget for 3,000 sails is: (a) Materials £150,000, Labour £96,000 and Overhead £65,000 (b) Materials £225,000, Labour £144,000 and Overheads £85,000 (c) Materials £225,000 Labour £144,000 and Overheads £97,500 (d) Materials £225,000 Labour £144,000 and Overheads £110,000 The material price variance for the month of July is: (a) £11,000 A (b) £11,000 F (c) £6,000 F (d) £6,000 A The material usage variance for the month of July is: (a) £5,000 A (b) (c) (d) £6,000 A £5,000 F 6,000 F

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 20P: Jillian Manufacturing Inc. manufactures a single product and uses a standard cost system. The...

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Salisbury Bottle Company manufactures plastic two-liter bottles for the beverage industry. The cost standards per 100 two-liter bottles are as follows: At the beginning of March, Salisburys management planned to produce 500,000 bottles. The actual number of bottles produced for March was 525,000 bottles. The actual costs for March of the current year were as follows: a. Prepare the March manufacturing standard cost budget (direct labor, direct materials, and factory overhead) for Salisbury, assuming planned production. b. Prepare a budget performance report for manufacturing costs, showing the total cost variances for direct materials, direct labor, and factory overhead for March. c. Interpret the budget performance report.
Adam Corporation manufactures computer tables and has the following budgeted indirect manufacturing cost information for the next year: If Adam uses the step-down (sequential) method, beginning with the Maintenance Department, to allocate support department costs to production departments, the total overhead (rounded to the nearest dollar) for the Machining Department to allocate to its products would be: a. 407,500. b. 422,750. c. 442,053. d. 445,000.
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Lens & Shades sells sunglasses for $37 each and is estimating sales of 21,000 units in January and 19,000 in February. Each lens consist of 2.00 mm of plastic costing $2.50 per mm, 1.7 oz of dye costing $2.80 per ounce. and 0.50 hours direct labor at a labor rate of $18 per unit. Desired inventory levels are: Prepare a sales budget, production budget, direct materials budget for silicon and solution, and a direct labor budget.
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Jillian Manufacturing Inc. manufactures a single product and uses a standard cost system. The factory overhead is applied on the basis of direct labor hours. A condensed version of the company’s flexible budget follows: The product requires 3 lb of materials at a standard cost of $5 per pound and 2 hours of direct labor at a standard cost of $10 per hour. For the current year, the company planned to operate at the level of 6,250 direct labor hours and to produce 3,125 units of product. Actual production and costs for the year follow: Required: For the current year, compute the factory overhead rate that will be used for production. Show the variable and fixed components that make up the total predetermined rate to be used. Prepare a standard cost card for the product. Show the individual elements of the overhead rate as well as the total rate. Compute (a) standard hours allowed for production and (b) under- or overapplied factory overhead for the year. Determine the reason for any under- or overapplied factory overhead for the year by computing all variances, using each of the following methods: Two-variance method Three-variance method (appendix) Four-variance method (appendix)
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