Question :
168.Palm Time, Inc. budgeted 6,000 step stools for June under : 1302887
168.Palm Time, Inc. budgeted 6,000 step stools for June under its standard costing system. Each stool is sold for $22. Actual production for June was 6,300 stools. The company uses units of product as the cost driver for overhead. Standards and actual costs follow for June:
Budgeted and StandardActual
Direct materials1.1 linear feet @ $2.40 a foot6,400 feet purchased for $15,040; 6,450 feet used
Direct labor0.10 hours @ $14.00 per hour620 hours @$14.30 per hour
Variable overhead$16,800 total$18,400
Fixed overhead$15.00 per stool$9,200
Show the calculation of the standard cost of one step stool.
169.Germ Free produces hand sanitizer. It uses units as the cost driver for overhead and employs a standard costing system. The following information was provided by the company’s controller:
Actual DataStandard and Budgeted Data
Produced14,400 unitsBudgeted units14,200 units
Materials purchased4,600 lbs. for a total of $32,660Budgeted materials0.35 lb. @ $7.00 per lb.
Materials used4,560 lbs.Budgeted labor0.5 hours @ $12.10 per hour
Labor worked7,520 hrs. costing $91,368Budgeted variable overhead$39,050
Actual overheadFixed $51,800; Variable $38,100Budgeted fixed overhead$51,120
a.Calculate the material price and quantity variances and indicate if each is favorable or unfavorable.
b.Calculate the labor rate and efficiency variances and indicate if each is favorable or unfavorable.
170.Germ Free produces hand sanitizer. It uses units as the cost driver for overhead and employs a standard costing system. The following information was provided by the company’s controller:
Actual DataStandard and Budgeted Data
Produced14,400 unitsBudgeted units14,200 units
Materials purchased4,600 lbs. for a total of $32,660Budgeted materials0.35 lb. @ $7.00 per lb.
Materials used4,560 lbs.Budgeted labor0.5 hours @ $12.10 per hour
Labor worked7,520 hrs. costing $91,368Budgeted variable overhead$39,050
Actual overhead$89,900Budgeted fixed overhead$51,120
Calculate the controllable overhead variance and the overhead volume variances and indicate if each is favorable or unfavorable.
171.At the start of the year, ChillerIce estimated that the company would produce 480 portable ice makers during the year (40 per month). Annual fixed overhead costs were estimated to be $600,000 ($50,000 per month), and estimated variable overhead costs were estimated to be $500 per unit. Standard cost per unit was set at $3,450:
Standard material cost $1,200
Standard labor cost 500
Standard overhead rate per unit 1,750
Total $3,450
During the year, the company experienced stiff competition and ended up producing and selling only 400 ice makers. Budgeted annual total production costs were $1,656,000, and actual production costs were $1,616,400. The standard cost variances were as follows:
Material price variance $ 2,200 unfavorable
Material quantity variance 11,500 unfavorable
Labor rate variance (2,300) favorable
Labor efficiency variance 4,800 unfavorable
Controllable overhead variance 2,000 unfavorable
Overhead volume variance 100,000 unfavorable
Total $118,200 unfavorable
Suppose you are the CFO of ChillerIce and you have decided to investigate variances which exceed a threshold of 1/2 percent of the total budgeted production cost. Which variance(s) will you investigate? Explain the basis for your answer.
172.The standard labor cost in the production of a pair of Crocs is 0.40 hours at $15 per hour. During the month of June, 13,000 pairs were produced. Actual labor costs were $76,735 for 5,150 hours. Compute the labor rate and labor efficiency variances for the month of June.
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