Crash! Forgot to do a backup! Hard drive is toast! You have lost a portion of ac
ID: 2421831 • Letter: C
Question
Crash! Forgot to do a backup! Hard drive is toast! You have lost a portion of accounting information from Jordan and Taylor. Admitting your mistake will not only shake their confidence, but might also end your brownie deliveries. They are coming over to discuss variances in a couple hours.
The only information available from your calculations are the variances. You don't want to admit the actual values for those calculations are lost!!!
You still have the following standards.
Selling price to Yumminess at $10 per tin. The cost is $8 per tin, which includes $6 of direct material and $1.50 of direct labor. Direct labor is 1 hour per 100 tins. Annual manufacturing overhead is estimated at $100,000 for the expected sales of 200,000 tins. The breakdown for manufacturing overhead includes 85% of variable costs.
1. What is the standard fixed manufacturing overhead cost per tin?
2. The Volume Variance is $750 F. How many units were actually produced during the year?
3. How much is total budgeted fixed manufacturing overhead?
4. The Controllable Variance is $3250 U. What was the total dollar amount for actual manufacturing overhead?
5. What are the total standard hours allowed for actual production?
6. The Labor Quantity Variance is $300 U. How many total actual hours were worked?
7. What is the total standard cost of direct materials for total actual production?
8. Total Material Price Variance is $16,800 U. What was the actual direct material cost for total actual production?
I know there are similar questions like this out there, but these questions are slightly different and I think I may just be so tired I am struggling with them so any help you could give would be great!
Explanation / Answer
1. Standard fixed manufacturing o/h per tin:
Fixed manufacturing o/h = 100,000*15% = 15,000
Number of tins = 200,000
Standard fixed manufacturing o/h per tin = 15,000 / 200,000 = 0.075
2. Volume variance = Fixed rate * (Actual output - Budgeted output)
750 = 0.075 * (x - 200,000)
x = 200,000 + (750/0.075) = 210,000
Actual output = 210,000 units
3. Total budgted fixed manufacturing o/h - 15,000
4. Budgeted o/h = 100,000
Less: Favourable volume variance 750
Add: Unfavourable controllable variance = 3,250
Actual Manufacturing o/h = 102,500
5. Standard hours allowed for production:
For 100 tins = 1 Hr
For 200,000 tins = 2000 hours
6. Labor quantity variance = Standard rate * (Actual hours - Standard hours)
300 = 1.5 * ( x - 2000)
x = 2000 + (300/1.5) = 2,200 hours
7. Standard cost of direct materials for actual production = Standard rate * Actual units = 6*210,000 = 1,260,000
8. Material price variance = Actual Quantity * (Actual price - Standard price)
16,800 = 210,000 * ( x - 6)
x = (16,800/210,000)+ 6 = 6.08
Actual direct material cost = 210,000 *6.08 = 1,276,800
Another way of doing this = Standard cost for actual production + Materials price variance = 1,260,000+16,800 = 1,276,800