Fluegge Incorporated has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours. InputsStandard Quantity or Hours per Unit of OutputStandard Price or RateDirect materials5.7liters$ 5.40per literDirect labor0.70hours$ 20.60per hourVariable manufacturing overhead0.70hours$ 5.50per hour The company has reported the following actual results for the product for December: Actual output4,100unitsRaw materials purchased25,100litersActual price of raw materials$ 4.80per literActual cost of raw materials purchased$ 120,480 Raw materials used in production23,360litersActual direct labor-hours2,700hoursActual direct labor rate$ 21.20per hourActual direct labor cost$ 57,240 Actual variable overhead rate$ 5.90per hourActual variable overhead cost$ 15,930 The raw materials price variance for the month is closest to: Multiple Choice A. $15,060 U B. $14,016 F C. $15,060 F D. $14,016 U

Variance arises when the actual costs differ from the standard costs. The results are favorable…

Answered: Fluegge Incorporated has provided the…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 30P: Primera Company produces two products and uses a predetermined overhead rate to apply overhead....

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Fluegge Incorporated has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours.

Inputs	Standard Quantity or Hours per Unit of Output	Standard Price or Rate
Direct materials	5.7	liters	$ 5.40	per liter
Direct labor	0.70	hours	$ 20.60	per hour
Variable manufacturing overhead	0.70	hours	$ 5.50	per hour

The company has reported the following actual results for the product for December:

Actual output	4,100	units
Raw materials purchased	25,100	liters
Actual price of raw materials	$ 4.80	per liter
Actual cost of raw materials purchased	$ 120,480
Raw materials used in production	23,360	liters
Actual direct labor-hours	2,700	hours
Actual direct labor rate	$ 21.20	per hour
Actual direct labor cost	$ 57,240
Actual variable overhead rate	$ 5.90	per hour
Actual variable overhead cost	$ 15,930

The raw materials price variance for the month is closest to:

Multiple Choice

A. $15,060 U

B. $14,016 F

C. $15,060 F

D. $14,016 U

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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