Question

16 Perez Company manufactures molded candles that are finished by hand. The company developed the following standards for a new line of drip candles: 1.80 pounds Amount of direct materials per candle Price of direct materials per pound 0.50 Quantity of labor per unit Price of direct labor per hour 1.30 hours 8.00/hour $94,600 Total budgeted fixed overhead. During 2017, Perez planned to produce 22,000 drip candles. Production lagged behind expectations, and it actually produced only 15,000 drip candles. At year-end, direct materials purchased and used amounted to 28,900 pounds at a unit price of $0.45 per pound. Direct labor costs were actually $7.60 per hour and 21,600 actual hours were worked to produce the drip candles. Overhead for the year actually amounted to $67,50o. Overhead is applied to products using a predetermined overhead rate based on estimated units. Required a.&b. Compute the standard cost per candle for direct materials, direct labor, overhead and also the total standard cost for one drip candle c.&d. Compute the actual cost per candle for direct materials, direct labor, overhead and also the total actual cost per candle. e. Compute the price and usage variances for direct materials and direct labor. f. Compute the fixed cost spending and volume variances Complete this question by entering your answers in the tabs below. Req A and B Req C and D Req E Req F Compute the standard cost per candle for direct materials, direct labor, overhead and also the total standard cost for one drip candle. (Round your answers to 2 decimal places.) Standard Cost cost per unit Direct material Direct labor Overhead Total per candle > Req A and B Req C and D

Answer 1

a&b)
D.material	$                                                             0.90	1.80*0.5
D.labor	$                                                           10.40	1.30*8
Fixed OH	$                                                             4.30	94600/22000
Total per candle	$                                                           15.60
c&d)
D.material	$                                                             0.87	(28900/15000)*0.45
D.labor	$                                                           10.94	(21600/15000)*7.60
Fixed OH	$                                                             4.50	67500/15000
Total per candle	$                                                           16.31
e)
D.mat price variance=	AQ*SP-AQ*AP
D.mat price variance=	28900*0.50-28900*0.45
D.mat price variance=	$                                                      1,445.00	Favourable
D.mat usage variance=	SQ*SP-AQ*SP
D.mat usage variance=	(1.80*15000)*0.50-(28900*0.50)
D.mat usage variance=	$                                                       (950.00)	UnFavourable
D.LABOR RATE variance=	AH*SR-AH*AR
D.LABOR RATE variance=	21600*8-21600*7.60
D.LABOR RATE variance=	$                                                      8,640.00	Favourable
D.LABOR usage variance=	SH*SR-AH*SR
D.LABOR usage variance=	(15000*1.30)*8-21600*8
D.LABOR usage variance=	$                                                  (16,800.00)	UnFavourable
f)
Fixed cost spending variance=	Budgeted OH-Actual OH
Fixed cost spending variance=	94600-67500
Fixed cost spending variance=	$                                                   27,100.00	Favourable
Fixed cost volume variance=	Budgeted OH-actual units*budgeted rate
Fixed cost volume variance=	94600-15000*4.30
Fixed cost volume variance=	$                                                   30,100.00	UnFavourable

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