Alpine Ski Company manufactures custom skis. The standard cost of direct materials and direct manufacturing labor is $245 per pair. This includes 15 pounds of direct materials, at the budgeted price of $5 per pound, and 8 hours of direct manufacturing labor, at the budget rate of $18.75 per hour. Following are additional data for the month of December. Units completed: 3,200 pairs Direct material purchases: 52,000 pounds Cost of direct material purchases: $270,400 Actual direct manufacturing labor hours: 22,400 hours Actual direct labor cost: $436,800 Direct materials efficiency variance: $2,500 U There were no beginning inventories. Compute direct manufacturing labor variances for December.

Alpine Ski Company manufactures custom skis. The standard cost of direct materials and direct manufacturing labor is $245 per pair. This includes 15 pounds of direct materials, at the budgeted price of $5 per pound, and 8 hours of direct manufacturing labor, at the budget rate of $18.75 per hour. Following are additional data for the month of December. Units completed: 3,200 pairs Direct material purchases: 52,000 pounds Cost of direct material purchases: $270,400 Actual direct manufacturing labor hours: 22,400 hours Actual direct labor cost: $436,800 Direct materials efficiency variance: $2,500 U There were no beginning inventories. Compute direct manufacturing labor variances for December.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter9: Evaluating Variances From Standard Costs

Section: Chapter Questions

Problem 3E: Salisbury Bottle Company manufactures plastic two-liter bottles for the beverage industry. The cost...

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Business Specialty, Inc., manufactures two staplers: small and regular. The standard quantities of direct labor and direct materials per unit for the year are as follows: The standard price paid per pound of direct materials is 1.60. The standard rate for labor is 8.00. Overhead is applied on the basis of direct labor hours. A plantwide rate is used. Budgeted overhead for the year is as follows: The company expects to work 12,000 direct labor hours during the year; standard overhead rates are computed using this activity level. For every small stapler produced, the company produces two regular staplers. Actual operating data for the year are as follows: a. Units produced: small staplers, 35,000; regular staplers, 70,000. b. Direct materials purchased and used: 56,000 pounds at 1.5513,000 for the small stapler and 43,000 for the regular stapler. There were no beginning or ending direct materials inventories. c. Direct labor: 14,800 hours3,600 hours for the small stapler and 11,200 hours for the regular stapler. Total cost of direct labor: 114,700. d. Variable overhead: 607,500. e. Fixed overhead: 350,000. Required: 1. Prepare a standard cost sheet showing the unit cost for each product. 2. Compute the direct materials price and usage variances for each product. Prepare journal entries to record direct materials activity. 3. Compute the direct labor rate and efficiency variances for each product. Prepare journal entries to record direct labor activity. 4. Compute the variances for fixed and variable overhead. Prepare journal entries to record overhead activity. All variances are closed to Cost of Goods Sold. 5. Assume that you know only the total direct materials used for both products and the total direct labor hours used for both products. Can you compute the total direct materials and direct labor usage variances? Explain.
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