MGAC03H3 Chapter 8: Chapter 8 Notes
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ABC Dress Shop produces high quality formal dresses. In July2018 they produced 16,000 dresses. For the month of July thefollowing standard and actual cost data are available. The normalmonthly capacity of the company is 40,000 direct labor hours. Allmaterial purchased in July was used in July production.
Standard per Dress | Actual | |
Direct materials | 5.0 yards @ $8.50 per yard | $643,250 for 83,000 yards |
Direct labor | 2.0 hours @ $12.00 per hour | $425,000 for 34,000 hours |
Overhead | hours @ $5.15 per hour (fixed $3.25; variable $1.90) | $125,000 fixed overhead $49,000 variable overhead |
Overhead is applied on the basis of direct labor hours. Atnormal capacity, budgeted fixed overhead costs are $130,000 permonth and budgeted variable overhead costs are $76,000 permonth.
Variance | Standard | Actual | Variance | % Variance | >5% | |
Direct Materials Price | 136000 | 124000 | 12000 | 8.82% | Yes | Investiage |
Direct Materials Quantity | 680000 | 705500 | 25500 | 3.75% | No | |
Direct Labor Rate | 408000 | 425000 | 17000 | 4.17% | No | |
Direct Labor Efficiency | 384000 | 408000 | 24000 | 6.25% | Yes | Investiage |
Variable OverheadSpending | 64600 | 49000 | 15600 | 24.15% | Yes | Investiage |
Variable OverheadEfficiency | 64600 | 63080 | 1520 | 2.35% | No | |
Fixed Overhead Spending | 130000 | 125000 | 5000 | 3.85% | No | |
Fixed Overhead ProductionVolume | 130000 | 110500 | 19500 | 15.00% | Yes | Investiage |
QUESTION: Provide a discussion of thetradeoffs that might exist between the direct material and directlabor variances.
Please answer all sections and please show all work.
Norwall Company's variable manufacturing overhead should be $1.95 per standard machine-hour |
The following information is available for a recent month: |
a. | The denominator activity of 28,520 machine-hours is used to compute the predetermined overhead rate. |
b. | At the 28,520 standard machine-hours level of activity, the company should produce 12,400 units of product. |
c. | The companyĆÆĀæĀ½s actual operating results were: |
Number of units produced | 13,390 | ||||||||
Actual machine-hours | 29,780 | ||||||||
Actual variable manufacturing overhead cost | $ | 53,604 | |||||||
Actual fixed manufacturing overhead cost | $ | 50,900 | |||||||
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