Question :
Ex. 211
Platt Company produces one product, a putter called PAR-putter. : 1311916
Ex. 211
Platt Company produces one product, a putter called PAR-putter. Platt uses a standard cost system and determines that it should take one hour of direct labor to produce one PAR-putter. The normal production capacity for this putter is 100,000 units per year. The total budgeted overhead at normal capacity is $500,000 comprised of $200,000 of variable costs and $300,000 of fixed costs. Platt applies overhead on the basis of direct labor hours.
During the current year, Platt produced 85,000 putters, worked 89,000 direct labor hours, and incurred variable overhead costs of $160,000 and fixed overhead costs of $300,000.
Instructions
(a)Compute the predetermined variable overhead rate and the predetermined fixed overhead rate.
(b)Compute the applied overhead for Platt for the year.
(c)Compute the total overhead variance.
Ex. 212
Hector Company has developed the following standard costs for its product for 2012:
HECTOR COMPANY
Standard Cost Card
Product A
Cost ElementStandard Quantity×Standard Price=Standard Cost
Direct materials4 pounds$3$12
Direct labor3 hours824
Manufacturing overhead3 hours4 12
$48
The company expected to produce 30,000 units of Product A in 2013 and work 90,000 direct labor hours.
Actual results for 2013 are as follows:
31,000 units of Product A were produced.
Actual direct labor costs were $746,200 for 91,000 direct labor hours worked.
Actual direct materials purchased and used during the year cost $346,500 for 126,000 pounds.
Actual variable overhead incurred was $155,000 and actual fixed overhead incurred was $205,000.
Instructions
Compute the following variances showing all computations to support your answers. Indicate whether the variances are favorable or unfavorable.
(a)Materials quantity variance.
(b)Total direct labor variance.
(c)Direct labor quantity variance.
(d)Direct materials price variance.
(e)Total overhead variance.
Ex. 213
Dart Company developed the following standard costs for its product for 2013:
DART COMPANY
Standard Cost Card
Cost ElementsStandard Quantity×Standard Price=Standard Cost
Direct materials4 pounds$ 5$20
Direct labor2 hours1020
Variable overhead2 hours48
Fixed overhead2 hours2 4
$52
The company expected to work at the 120,000 direct labor hours level of activity and produce 60,000 units of product.
Actual results for 2013 were as follows:
56,800 units of product were actually produced.
Direct labor costs were $1,092,000 for 112,000 direct labor hours actually worked.
Actual direct materials purchased and used during the year cost $1,108,800 for 231,000 pounds.
Total actual manufacturing overhead costs were $680,000.
Ex. 213(cont.)
Instructions
Compute the following variances for Dart Company for 2013 and indicate whether the variance is favorable or unfavorable.
1.Direct materials price variance.
2.Direct materials quantity variance.
3.Direct labor price variance.
4.Direct labor quantity variance.
a5.Overhead controllable variance.
a6.Overhead volume variance.
Ex. 214
Flagstaff, Inc. uses standard costing for its one product, baseball bats. The standards call for 3 board-feet of wood at $1.40 per board-foot, and 45 minutes of work at $12 per hour per bat. Total manufacturing overhead costs were estimated at $9,450, of which the variable portion was $0.50 per bat and the fixed portion was $1.00 per bat with an estimate of 6,300 bats to be produced. Flagstaff identifies price variances at the earliest possible point in time.
During March, the company had the following results:
Direct labor used = 4,800 hours at a cost of $56,400
Actual manufacturing overhead fixed costs = $6,000
Actual manufacturing overhead variable costs = $3,100
Bats produced = 6,000
Instructions
Compute the following variances for March.
1.Labor quantity variance
2.Total labor variance
a3.Overhead controllable variance
a4.Overhead volume variance
Ex. 215
Prescott Manufacturing manufactures widgets for distribution. The standard costs for the manufacture of widgets follow:
Standard CostsActual Costs
Direct materials3 lbs. per widget at31,000 lbs. at $34
$35 per poundper pound
Direct labor2.5 hours per widget22,500 hours at
at $11 per hour$11.80 per hour
Factory overheadVariable cost, $24/widget$241,500 variable cost
Fixed cost, $40/widget$381,250 fixed cost
Ex. 215(Cont.)
Budgeted factory overhead was $640,000. Overhead applied is based on widgets produced. The company estimated that 10,000 widgets would be produced; however, only 9,600 were produced.
Instructions
Calculate the following amounts.
1.Rate at which total factory overhead is applied
2.Materials price variance
3.Total materials variance
a4.Overhead volume variance
a5.Overhead controllable variance
