Shamrock Manufacturing Company uses a standard cost system in accounting for the cost of its main product. The following standards have been established for the direct manufacturing costs per unit: Direct materials (2 kg at $7.50 per kilogram) $15.00 per unit Direct labour (3 hours at $12 per hour) $36.00 per unit Budgeted overhead for the month of April (based on expected activity of 11.160 direct labour hours) is as follows: Overhead is applied based on labour hours. The average activity per month is 12,090 direct labour hours. The company calculates Variable overhead $36,270 overhead rates based on average activity. Results for the month of April are as follows: Fixed overhead 24.180 Units produced Total overhead $60,450 Direct materials used (8,060 kg) Direct labour (11,780 hours) 3,906 Calculate the variable overhead spending, quantity, and budget variances. (Round answers to 2 decimal places, e.g. 15.20.) $55,614 Variable spending variance $ 144,305 Variable overhead 35,340 Variable efficiency variance $ Fixed overhead 24,800 Total variable budget variance $ Total costs $260,059 There was no beginning or ending work in process inventory.
Shamrock Manufacturing Company uses a standard cost system in accounting for the cost of its main product. The following standards have been established for the direct manufacturing costs per unit: Direct materials (2 kg at $7.50 per kilogram) $15.00 per unit Direct labour (3 hours at $12 per hour) $36.00 per unit Budgeted overhead for the month of April (based on expected activity of 11.160 direct labour hours) is as follows: Overhead is applied based on labour hours. The average activity per month is 12,090 direct labour hours. The company calculates Variable overhead $36,270 overhead rates based on average activity. Results for the month of April are as follows: Fixed overhead 24.180 Units produced Total overhead $60,450 Direct materials used (8,060 kg) Direct labour (11,780 hours) 3,906 Calculate the variable overhead spending, quantity, and budget variances. (Round answers to 2 decimal places, e.g. 15.20.) $55,614 Variable spending variance $ 144,305 Variable overhead 35,340 Variable efficiency variance $ Fixed overhead 24,800 Total variable budget variance $ Total costs $260,059 There was no beginning or ending work in process inventory.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter10: Standard Costing And Variance Analysis
Section: Chapter Questions
Problem 72P: Moleno Company produces a single product and uses a standard cost system. The normal production...
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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