I. DIRECT COST AND OVERHEAD COST VARIANCE ANALYSIS Goldilock Inc. produces safe deposit boxes. During February 20X2, the company produces 1,050 units of product and incurred the following actual costs. Variable overhead Actual labor cost (3.000 direct-labor hours) Actual material cost (2.200 lbs of metal purchased and used) $48,000 70,500 50.600 One unit of safe deposit box is planned to use 2 lbs of metal and consume 3 direct-labor hours. Overhead is budgeted and applied using direct labor hour. Standard cost information are as follows: Standard costs per safe deposit box Direct labor Direct material Variable overhead $75 42 45 Required: i. Calculate price and efficiency variance for direct material 2. Calculate price and efficiency variance for direct labor 3. Calculate spending and efficiency variance for variable overhead.
I. DIRECT COST AND OVERHEAD COST VARIANCE ANALYSIS Goldilock Inc. produces safe deposit boxes. During February 20X2, the company produces 1,050 units of product and incurred the following actual costs. Variable overhead Actual labor cost (3.000 direct-labor hours) Actual material cost (2.200 lbs of metal purchased and used) $48,000 70,500 50.600 One unit of safe deposit box is planned to use 2 lbs of metal and consume 3 direct-labor hours. Overhead is budgeted and applied using direct labor hour. Standard cost information are as follows: Standard costs per safe deposit box Direct labor Direct material Variable overhead $75 42 45 Required: i. Calculate price and efficiency variance for direct material 2. Calculate price and efficiency variance for direct labor 3. Calculate spending and efficiency variance for variable overhead.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter10: Standard Costing And Variance Analysis
Section: Chapter Questions
Problem 58E: At the beginning of the year, Lopez Company had the following standard cost sheet for one of its...
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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