ID: A Krane Company has a standard costing system and keeps all its costs up to
ID: 2600678 • Letter: I
Question
ID: A Krane Company has a standard costing system and keeps all its costs up to date. The company's main pr is beach towels which are made in a single department. The standard variable costs for one beach towel (unit) 10 are as follows: Direct materials (3 yards at $1.00 per yard) Direct labor (1/2 hour at $9.00 per hour) Variable overhcad (1/2 hour@$5.00 per direct labor hour) 4.5 Standard variable cost per unit company's normal capacity is 10,000 direct labor hours. Its budgetod fixed overhead costs for the year were $24,000. During the year, it produced and sold 22,000 beach towels and it purchased 66.250 yards of matcrials, the purchase cost was $0.99 per yard. The avcrage labor rate was $9.10 per hour, and 10,900 direct labor hours were worked. The company's actual variable overhead costs for the year were $55,100, and its fixed costs were $24,500 Using the data given, compute the following using formulas or diagram form:Explanation / Answer
Answer to A
Answer to B
Answer to C
Total Variable Overhead Variance = Variable Overhead Spending Rate Variance + Variable Overhead Efficiency Variance
= - 600 + 500
= 100 Unfav
Variable Overhead Spending Rate Variance = (Standard Rate - Actual Rate) x Actual Hours = [5 -5.055 ] x 10900 = 600 Unfav