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PROBLEM 10A-10 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 wel" said Kim Clark, president of Martell Company. "Our S18,300 overall
The company produces and sells a single product. The standard cost card for the product follows:
Inputs | (1) Standard Quantity or Hours | (2) Standard Price or Rate | Standard Cost (1) x(2) |
Direct materials | 2 feet |
$8.45 per foot | $16.90 |
Direct labor | 1.4 hours |
$16 per hour | 22.40 |
Variable |
1.4 hours |
$2.50 per hour | 3.50 |
Fixed overhead | 1.4 hours |
$6 per hour | 8.40 |
Total standard cost per unit | $51.20 |
The following additional information is available for the year just completed
a 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:
a. The variable overhead rate and efficiency variances for the year.
b. The fixed overhead budget and volume variances for the year.
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MANAGERIAL ACCOUNTING
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