CONNECT ONLINE ACCESS F/MANAGERIAL ACC.
6th Edition
ISBN: 9781264445356
Author: Noreen
Publisher: MCG
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Chapter 10A, Problem 10A.10P
Comprehensive
“Wonderful! Not only did our salespeople do a good job in meeting the sales budget this year, but our production people did a good job in controlling costs as well,” said Kim Clark, president of Martell Company. “Our $18,300 overall
The company produces and sells a single product. The standard cost card for the product follows:
The following additional information is available for the year just completed:
- The company manufactured 30,000 units of product during the year.
- A total of 64,000 feet of material was purchased during the year at a cost of $8.55 per foot. All of this material was used to manufacture the 30,000 units produced. There were no beginning or ending inventories for the year.
- The company worked 43,500 direct labor-hours during the year at a direct labor cost of $15.80 per hour.
- Overhead is applied to products on the basis of standard direct labor-hours. Data relating to manufacturing overhead costs follow:
Required:
- Compute the materials price and quantity variances for the year.
- Compute the labor rate and efficiency variances for the year.
- For manufacturing overhead compute:
- The variable overhead rate and efficiency variances for the year.
- The fixed overhead budget and volume variances for the year.
- Total the variances you have computed, and compare the net amount with the $18,300 mentioned by the president. Do you agree that bonuses should be given to everyone for good cost control during the year? Explain.
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1. In a combined 3-variance analysis, what would the variance report show? (HINT: The answer is total spending variance $20,500 unfavorable, but I need work to support this)
(18 pts) 2. Wonderful! Not only did our salespeople do a good job in meeting the sales budget this year, but our production people did a good job in controlling costs as well, “ said Kim Clark, president of Martell Company. “ Our $18,000 overall manufacturing cost variance is only 1.5 % of the standard $1,200,000 standard cost of products sold during the year. That’s well within the 3 % parameter set by management for acceptable variances. It looks like everyone will be in line for a bonus this year.”
The company produces and sells a single product. A standard cost card for the product follows:
Standard Cost Card - Per Unit of Product
Direct materials, 2 feet at $8.45 ……………… $16.90
Direct labor, 1.4 hours at $8 ………………… 11.20
Variable overhead, 1.4 hours at $2.50 ……….. 3.50
Fixed overhead, 1.4 hours at $6 ……………… 8.40
Standard cost per unit………………… $ 40.00…
help me
Chapter 10A Solutions
CONNECT ONLINE ACCESS F/MANAGERIAL ACC.
Ch. 10A - Fixed Overhead Variances LO10—4 Primara...Ch. 10A - Prob. 10A.2ECh. 10A - Prob. 10A.3ECh. 10A - Prob. 10A.4ECh. 10A - Prob. 10A.5ECh. 10A - Prob. 10A.6ECh. 10A - Prob. 10A.7ECh. 10A - Applying Overhead; Overhead Variances LO10—3,...Ch. 10A - Prob. 10A.9PCh. 10A - Comprehensive Standard Cost Variances LO10—1,...
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What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY