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Question: Guadelupe Company has set the following standard

Guadelupe Company has set the following standard costs per unit for the product it manufactures. Direct materials (10 lbs. @ $3.00 per lb.) . . . . . . . . . . . $30.00 Direct labor (4 hr. @ $6 per hr.) . . . . . . . . . . . . . . . . . . . .24.00 Overhead (4 hr. @ $2.50 per hr.) . . . . . . . . . . . . . . . . . . . 10.00 Total standard cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $64.00 The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 10,000 units per month. The following flexible budget information is available.
Guadelupe Company has set the following standard costs per unit for the product it manufactures.

Direct materials (10 lbs. @ $3.00 per lb.) . . . . . . . . . . . $30.00
Direct labor (4 hr. @ $6 per hr.) . . . . . . . . . . . . . . . . . . . .24.00
Overhead (4 hr. @ $2.50 per hr.) . . . . . . . . . . . . . . . . . . . 10.00
Total standard cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $64.00

The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 10,000 units per month. The following flexible budget information is available.


During March, the company operated at 90% of capacity and produced 9,000 units, incurring the following actual costs.


Required1. Compute the direct materials cost variance, including its price and quantity variances.2. Compute the direct labor variance, including its rate and efficiency variances.3. Compute these variances: (a) variable overhead spending and efficiency, (b) fixed overhead spending and volume, and (c) total overhead controllable.4. Prepare a detailed overhead variance report (as in Exhibit 8.15) that shows the variances for individual items of overhead.
During March, the company operated at 90% of capacity and produced 9,000 units, incurring the following actual costs.
Guadelupe Company has set the following standard costs per unit for the product it manufactures.

Direct materials (10 lbs. @ $3.00 per lb.) . . . . . . . . . . . $30.00
Direct labor (4 hr. @ $6 per hr.) . . . . . . . . . . . . . . . . . . . .24.00
Overhead (4 hr. @ $2.50 per hr.) . . . . . . . . . . . . . . . . . . . 10.00
Total standard cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $64.00

The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 10,000 units per month. The following flexible budget information is available.


During March, the company operated at 90% of capacity and produced 9,000 units, incurring the following actual costs.


Required1. Compute the direct materials cost variance, including its price and quantity variances.2. Compute the direct labor variance, including its rate and efficiency variances.3. Compute these variances: (a) variable overhead spending and efficiency, (b) fixed overhead spending and volume, and (c) total overhead controllable.4. Prepare a detailed overhead variance report (as in Exhibit 8.15) that shows the variances for individual items of overhead.
Required1. Compute the direct materials cost variance, including its price and quantity variances.2. Compute the direct labor variance, including its rate and efficiency variances.3. Compute these variances: (a) variable overhead spending and efficiency, (b) fixed overhead spending and volume, and (c) total overhead controllable.4. Prepare a detailed overhead variance report (as in Exhibit 8.15) that shows the variances for individual items of overhead.





Transcribed Image Text:

Operating Levels 70% 80% 90% Production in units ... 7,000 8,000 9,000 Scandard direct labor hours 28,000 32,000 36,000 Budgeted overhead Variable overhead costs Indirect materials $ 8,750 $10,000 $I1,250 Indirect labor 14,000 16,000 18,000 Power 3,500 4,000 4,500 Maintenance 1,750 2,000 2,250 Total variable costs 28,000 32,000 36,000 Fixed overhead costs Rent of factory building 12,000 12,000 12,000 Depreciation-machinery 20,000 20,000 20,000 Taxes and insurance. 2.400 2,400 2,400 Supervisory salaries Total fixed costs.. 13,600 13,600 13,600 48,000 48,000 48,000 Total overhead costs $76,000 $80,000 $84,000 Direct materials (92,000 lbs. @ 2.95 per Ib.) $271,400 Direct labor (37,600 hrs. @ $6.05 per hr.) 227.480 Overhead costs Indirect materials... Indirect labor.. S10,000 16,000 Power... 4,500 Maintenance. 3,000 Rent of factory building 12,000 Depreciation-machinery 19,200 Taxes and insurance. 3,000 Supervisory salaries. Total costs .. 14,000 81,700 $580,580



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4.99

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