Question

Q.1. The Bala Manufacturing Company's costing system has two direct-cost categories: direct materials and direct manufacturing labor. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of standard direct manufacturing labor hours (DLH). At the beginning of 2012, Bala adopted the following standards for its manufacturing costs: Input Cost per Output Unit Direct materials 3 lb, at 55 per lb $ 15.00 Direct manufacturing labor 5 hrs, at $15 per hr 75.00 Manufacturing overhead: Variable S6 per DLH 30.00 Fixed $ per DLH 40.00 Standard manufacturing cost $160.00 per output unit The denominator level for total manufacturing overhead per month in 2012 is 40,000 direct manufacturing labor-hours. Bala's flexible budget for January 2012 was based on this denominator level. The records for January indicated the following: Direct materials purchased 25,000 lb. at $5.20 per lb. Direct materials used 23,10 lb Direct manufacturing labor 40.100 hrs. at $14.60 per hr. Total actual manufacturing overhead (variable 5600,000 and fixed) Actual production 7.800 output units Required:- 1. Prepare a schedule of total standard manufacturing costs for the 7,800 output units in January 2012 2. For the month of January 2012, compute the following variances, indicating whether each is favorable (F)or unfavorable (U): a. Direct materials price variance, based on purchases b. Direct materials efficiency variance c. Direct manufacturing labor price variance d. Direct manufacturing labor efficiency variance e. Total manufacturing overhead spending variance f. Variable manufacturing overhead efficiency variance g. Production-volume variance (3+7=10)

Answer 1

Please hit LIKE button if this helped. Part 1 Cost per Output Unit Total standard cost $ 15 $ 117,000 $ 75 $ 585,000 Direct materials Direct manufacturing labor Manufacturing overhead: Variable Fixed Total standard manufacturing cost $ $ $ 30 $ 40 $ 160 $ 234,000 312,000 1,248,000 $ 7,800*3 Part 2a and 2b Standard Material Price Standard Quantity Actual Quantity Actual Quantity used Actual Matrial Price 5.00 23,400 25,000 23,100 5.20 $ Material Price Variance AQIAP-SP) (Actual Price $ $ Standard Price) $ Actual Quantity 25000 5.00 5.20 5,000 Unfavorable Material Quantity Variance SP(AQ-SQ) (Actual Quantity 23,100 $ 1,500.00 Favorable Standard Qty) 23,400 Standard Price $ 5.00 Part 2c and 2d $ Standard Hour Rate Standard Hour Actual Hours 7,800*5 15.00 39,000 40,100 Actual Hour Rate $ 14.60 Labor Rate Variance AH(AR-SR) (Actual Rate $ $ Standard Rate) $ 15.00 Actual Hours 40100 14.60 16,040 Favorable Labor Efficiency Variance SR(AH-SH) (Actual Quantity 40,100 $ 16,500 Unfavorable Standard Qty) 39,000 Standard Price $ 15.00

Part 2e,2f,2g $ 320,000 $ 240,600 Fixed Manufacturing overheads $8 standard hour*40,000 Budgeted Hours Variable Manufacturing overheads $6 standard hour*40,100 actual hours Total Applied overheads Actual Manufacturing overheads Total Manufacturing overhead spending variance a $ b $ $ 560,600 600,000 39,400 Unfavorable b-a $ Standard Hour Rate Standard Hour Actual Hours 7,800*5 6.00 39,000 40,100 Labor Efficiency Variance SR(AH-SH) (Actual Quantity 40,100 $ 6,600 Unfavorable Standard Qty) 39,000 Standard Price $ 6.00 $40*7,800 units Applied Fixed Overheads Budgeted Fixed Overheads Production volume variance $ $ $ 312,000 a 320,000 b 8,000 Unfavorable b-a