Requirements
1. Compute the variable manufacturing overhead variances. What do each of these variances tellâ management?
2. Compute the fixed manufacturing overhead variances. What do each of these variances tellâ management?
Standard Price and Volume
Direct materials (resin). . . . . . . . . . . . . . . . . . . . . . .
13 pounds per pot at a cost of $4.00
per pound
Direct labor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.0 hours at a cost of $17.00 per hour
Standard variable manufacturing
overhead rate. . . . . . . . . . . . . . . . . . . . . . . . .
$7.00 per direct labor hour
Budgeted fixed manufacturing overhead. . . . . . . . .
$50,000
Standard fixed MOH rate. . . . . . . . . . . . . . . . . . .
$10.00 per direct labor hour (DLH)
Actual Results
Country Designs allocated fixed manufacturing overhead to production based standard direct labor hours. Last month, the company reported the following actual results for the production of 1,300 flower pots:
Direct materials. . . . . . . . . . . . . . . . . . . . . . . .
Purchased 18,510 pounds at a cost of
$4.50 per pound; Used 17,810 pounds to
produce 1,300 pots
Direct labor. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Worked 4.5 hours per flower pot (5,850
total DLH) at a cost of $16.00 per hour
Actual variable manufacturing overhead. . . . .
$7.20 per direct labor hour for total
actual variable manufacturing overhead
of $42,120
Actual fixed manufacturing overhead. . . . . . .
$49,500
Standard fixed manufacturing overhead
allocated based on actual production. . . . . . .
$52,000
Requirements
1. Compute the variable manufacturing overhead variances. What do each of these variances tellâ management?
2. Compute the fixed manufacturing overhead variances. What do each of these variances tellâ management?
Standard Price and Volume
| Direct materials (resin). . . . . . . . . . . . . . . . . . . . . . . | 13 pounds per pot at a cost of $4.00 |
| per pound | |
| Direct labor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 4.0 hours at a cost of $17.00 per hour |
| Standard variable manufacturing | |
| overhead rate. . . . . . . . . . . . . . . . . . . . . . . . . | $7.00 per direct labor hour |
| Budgeted fixed manufacturing overhead. . . . . . . . . | $50,000 |
| Standard fixed MOH rate. . . . . . . . . . . . . . . . . . . | $10.00 per direct labor hour (DLH) |
Actual Results
Country Designs allocated fixed manufacturing overhead to production based standard direct labor hours. Last month, the company reported the following actual results for the production of 1,300 flower pots:
| Direct materials. . . . . . . . . . . . . . . . . . . . . . . . | Purchased 18,510 pounds at a cost of |
| $4.50 per pound; Used 17,810 pounds to | |
| produce 1,300 pots | |
| Direct labor. . . . . . . . . . . . . . . . . . . . . . . . . . . . | Worked 4.5 hours per flower pot (5,850 |
| total DLH) at a cost of $16.00 per hour | |
| Actual variable manufacturing overhead. . . . . | $7.20 per direct labor hour for total |
| actual variable manufacturing overhead | |
| of $42,120 | |
| Actual fixed manufacturing overhead. . . . . . . | $49,500 |
| Standard fixed manufacturing overhead | |
| allocated based on actual production. . . . . . . | $52,000 |
Related questions
The following standard costs were developed for one of theJackson Martinez company's products:
Standard Cost Card Per Unit
| Materials: 10 pounds x $8 per pound | $80.00 |
| Direct Labor: 3 hours x $32 per hour | 96.00 |
| Variable manufacturing overhead: $20 per hour | ? |
| Fixed Manufacturing overhead: $X per hour | ? |
| Total standard costs per unit | ? |
The following information is available regarding the company;soperations for the period.
Units produced: 15,000
Materials purchased and used 153,000 pounds @ $7.50 perpound
Direct Labor: 47,000 hours @ $34 per hour
Manufacturing overhead incurred:
Variable: $912,000
Fixed: 2,560,000
Budgeted fixed manufacturing overhead for the period is$2,700,000 and expected capacity for the period is 45,000 directlabor hours.
Required:
a) Calculate the standard fixed manufacturing overhead rate
b) complete the standard cost card per unit for the product
c) calculate the direct material price and quantityvariances
d) calculate the direct labor rate and efficiency variances
e) calculate the variable overhead rate and efficiencyvariances
f) calculate the fixed overhead spendin variance
Rogen Corporation manufactures a single product. The standard cost per unit of product is shown below.
| Direct materialsâ1 pound plastic at $6 per pound | $ 6.00 | |
| Direct laborâ2.00 hours at $11.15 per hour | 22.30 | |
| Variable manufacturing overhead | 14.00 | |
| Fixed manufacturing overhead | 18.00 | |
| Total standard cost per unit | $60.30 |
The predetermined manufacturing overhead rate is $16 per direct labor hour ($32.00 ÷ 2.00). It was computed from a master manufacturing overhead budget based on normal production of 12,000 direct labor hours (6,000 units) for the month. The master budget showed total variable costs of $84,000 ($7.00 per hour) and total fixed overhead costs of $108,000 ($9.00 per hour). Actual costs for October in producing 4,100 units were as follows.
| Direct materials (4,250 pounds) | $ 26,350 | |
| Direct labor (8,070 hours) | 92,402 | |
| Variable overhead | 99,710 | |
| Fixed overhead | 33,590 | |
| Total manufacturing costs | $252,052 |
The purchasing department buys the quantities of raw materials that are expected to be used in production each month. Raw materials inventories, therefore, can be ignored.
(a)
Compute all of the materials and labor variances. (Round answers to 0 decimal places, e.g. 125.)
(b)
Compute the total overhead variance.
