Soriano Manufacturing Company uses a standard cost accounting system to account for the manufacturing of exhaust...
Soriano Manufacturing Company uses a standard cost accounting system to account for the manufacturing of exhaust fans. In July 2020, it accumulates the following data for 1,500 units started and finished:
|
Cost and Production Data |
Actual |
Standard |
|---|---|---|
|
Raw materials |
||
|
Units purchased |
21,000 |
|
|
Units used |
21,000 |
22,000 |
|
Unit cost |
$3.40 |
$3.00 |
|
Direct labour |
||
|
Hours worked |
3,450 |
3,600 |
|
Hourly rate |
$11.80 |
$12.50 |
|
Manufacturing overhead |
||
|
Incurred |
$101,500 |
|
|
Applied |
$108,000 |
Manufacturing overhead was applied based on direct labour hours. Normal capacity for the month was 3,400 direct labour hours. At normal capacity, budgeted overhead costs were $20 per labour hour variable and $10.00 per labour hour fixed. Total budgeted fixed overhead costs were $34,000.
Jobs finished during the month were sold for $280,000. Selling and administrative expenses were $25,000.
Instructions
a.
Calculate all of the variances for direct materials and direct labour.
LQV = $1,875 F
b.
Calculate the total manufacturing overhead variance.
OHV = $6,500 F
c.
Calculate the overhead budget variance and the overhead volume variance.
d.
Prepare an income statement for management showing the variances. Ignore income taxes.
Please explain it well
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