Concept explainers
Computing and journalizing
3. VOH Cost Var. $985 F
Moss manufactures coffee mugs that it sells to other companies for customizing with their own logos l.toss prepares flexible budgets and uses a standard cost system to control
Direct Material (0.2 lbs. @ $0.25 per lb.) | $ 0.05 |
Direct Labor (3 minutes @ $0.11 per minute) | 0.33 |
Manufacturing |
|
Variable (3 minutes @ $0.06 per minute) | $ 0.18 |
Fixed (3 minutes @ $0.13 per minute) | 0.39 0.57 |
Total Cost per Coffee Mug | $ 0.95 |
Actual cost and production information for July 2018 follows:
a. There were no beginning or ending inventory balances. All expenditures were on account.
b. Actual production and sales were 62,500 coffee mugs.
c. Actual direct materials usage was 11,000 lbs. at an actual cost of 50.17 per lb.
d. Actual direct labor usage was 197,000 minutes at a total cost of 525,610.
e. Actual overhead cost was S10.835 variable and 529,765 fixed.
f. Selling and administrative costs were 595,000.
Requirements
1. Compute the cost and efficiency variances for direct materials and direct labor.
2. Journalize the purchase and usage of direct materials and the assignment of direct labor, including the related variances.
3. For manufacturing overhead, compute the variable overhead cost and efficiency variances and the fixed overhead cost and volume variances.
4. Journalize the actual manufacturing overhead and the allocated manufacturing overhead. Journalize the movement of all production costs from Work-in-Process Inventory. Journalize the adjusting of the Manufacturing Overhead account.
5. Moss intentionally hired more highly skilled workers during July. How did this decision affect the cost variances? Overall, was the decision wise?
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Horngren's Accounting: The Managerial Chapters (12th Edition) (loose Leaf Version)
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