Crash! Forgot to do a backup! Hard drive is toast! You have lost a portion of ac
ID: 2422196 • 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?
Explanation / Answer
Answer:
1) Standard Fixed Manufacturing Overhead Cost pertin
Annual manufacturing overhead cost for expected sales of 200,000 tins = $100,000
Variable Manufacturing Overhead = $100,000 x 85% = $85,000
Fixed Manufacturing Overhead = Annual Manufacturing Overhead – Variable Manufacturing Overhead = $100,000 - $85,000 = $15,000
Standard Fixed Manufacturing Overhead Cost Per tin = Fixed Manufacturing Overheads / Expected Volume = $15,000 / 200,000 = $0.075 per tin
2)
Standard Units = 200,000 tins
Standard Direct Labour Hours per tin = 1/100 x 200,000 = 2,000 Hours
Budgeted Hours = 2,000 Hours
Volume Variance = Absorbed Overhead – Budgeted Overhead =
$750 F = Actual Overhead - $15,000
Actual Overhead = $15,750
Actual Overhead = Standard Hours for Actual Output x Std Hour Rate = Actual Output x $0.075 = $15,750
Actual Output = $15,750 / 0.075 = 210,000 tins
3)
Total Budgeted Fixed Manufacturing Overhead = Std Hour Rate x Budgeted Hours = $0.075 x 200,000 = $15,000
4) Please ask a separate question..
5) Total Standard Hours Allowed for Actual Production:
Actual Production as calculated in part (2) = 210,000 tins
Total Standard Hours Allowed for Actual Production = 1/100 x 210,000 = 2,100 Hours
6) Labor Quantity Variance is $300 U. How many total actual hours were worked
Labour Quantity Variance = $300 U = Std, Rate (Std Hours for actual output – Actual Hours)
-$300 = $1.50 (2,100 – Actual Hours)
Actual Hours worked = 3450 Hours
Part 7, 8 & 4 ---- Please ask separate question as these are taking lot of time..
Thank you,