Seven Manufacturing Corporation uses both standards and budgets. The company estimates that production for the year will be 100,000 units of Product Fast. To produce these units of Product Fast, the company expects to spend $600,000 for materials and $800,000 for labor.
Compute the estimates for (a) a standard cost and (b) a budgeted cost.
Labor data for making one pound of finished product in Curling Co. are as follows: (1) Price—hourly wage rate $11.00, payroll taxes $1.80, and fringe benefits $1.20. (2) Quantity—actual production time 1.1 hours, rest periods and clean up 0.25 hours, and setup and downtime 0.15 hours.
Compute the following.
(a) Standard direct labor rate per hour.
(b) Standard direct labor hours per pound.
(c) Standard cost per pound.
During March, Patt, Inc. purchases and uses 8,800 pounds of materials costing $35,640 to make 4,000 tiles. Patt’s standard material cost per tile is $8 (2 pounds of material× $4.00).
Compute the total, price, and quantity material variances for Patt, Inc. for March.
During January, Ajax Co. incurs 1,850 hours of direct labor at an hourly cost of $11.80 in producing 1,000 units of its finished product. Ajax standard labor cost per unit of output is $22
(2 hours x $11.00).
Compute the total, price, and quantity labor variances for Ajax Co. for January.
In October, Glazier Inc. reports 42,000 actual direct labor hours, and it incurs $194,000 of manufacturing overhead costs. Standard hours allowed for the work done is 40,000 hours. Glazier’s predetermined overhead rate is $5.00 per direct labor hour.
Compute the total manufacturing overhead variance.
Solution 195 (2 min.)
Overhead data for Glazier Inc. are given in BE 195. In addition, the flexible manufacturing overhead budget shows that budgeted costs are $3.80 variable per direct labor hour and $60,000 fixed.
Compute the manufacturing overhead controllable variance.
Using the data in BE 195 and BE 196, compute the manufacturing overhead volume variance. Normal capacity was 50,000 direct labor hours.
Jet Industries purchased 6,000 units of raw material on account for $17,600, when the standard cost was $18,000. Later in the month, Jet Industries issued 5,600 units of raw materials for production, when the standard units were 5,800.
Journalize the transactions for Jet Industries to account for this activity.
Pedra, Inc. incurred direct labor costs of $54,000 for 6,000 hours. The standard labor cost was $55,200. During the month, Pedra assigned 6,000 direct labor hours costing $54,000 to production. The standard hours were 6,200.
Journalize the transactions for Pedra, Inc. to account for this activity.
Manufacturing overhead data for the production of Product B by North Bank, Inc. are as follows.
Overhead incurred for 69,000 actual direct labor hours worked $206,000
Overhead rate (variable $2.00; fixed $1.00) at normal capacity of
72,000 direct labor hours $3.00
Standard hours allowed for work done 69,000
Compute the controllable and volume overhead variances.