Cost Component Direct materials Direct labor Manufacturing overhead . . . . Standard Quantity X 4 pounds 3 hours 3 hours (b) 32,010 units of Product A were produced. The company expected to produce 31.000 units of Product A in 2022 using 93,000 direct labor hours. Actual results for 2022 are as follows: Materials Quantity Variance Total Direct Labor Variance Standard Price Direct Labor Quantity Variance $3 $ 8 $ Standard Cost $12 Actual direct labor costs were $770,800 for 94,000 direct labor hours worked. Actual direct materials purchased and used during the year cost $360,250 for 131,000 pounds. Actual variable overhead incurred was $161,000 and actual fixed overhead incurred was $211,000. Compute the following variances showing all computations to support your answers. Indicate whether the varian unfavorable. 24 12 $48
Cost Component Direct materials Direct labor Manufacturing overhead . . . . Standard Quantity X 4 pounds 3 hours 3 hours (b) 32,010 units of Product A were produced. The company expected to produce 31.000 units of Product A in 2022 using 93,000 direct labor hours. Actual results for 2022 are as follows: Materials Quantity Variance Total Direct Labor Variance Standard Price Direct Labor Quantity Variance $3 $ 8 $ Standard Cost $12 Actual direct labor costs were $770,800 for 94,000 direct labor hours worked. Actual direct materials purchased and used during the year cost $360,250 for 131,000 pounds. Actual variable overhead incurred was $161,000 and actual fixed overhead incurred was $211,000. Compute the following variances showing all computations to support your answers. Indicate whether the varian unfavorable. 24 12 $48
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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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A2
Transcribed Image Text:Monty Company has developed the following standard costs for its product for 2022:
MONTYCOMPANY
Standard Cost Card
Product A
Cost Component
Direct materials
Direct labor
Manufacturing overhead
.
Actual results for 2022 are as follows:
♦
.
(a)
(b)
Standard Quantity x Standard Price
4 pounds
3 hours
The company expected to produce 31.000 units of Product A in 2022 using 93,000 direct labor hours.
(c)
(d)
3 hours
(e)
Compute the following variances showing all computations to support your answers. Indicate whether the variances are favorable or
unfavorable.
Materials Quantity Variance
Total Direct Labor Variance
$3
8
Direct Labor Quantity Variance
Direct Materials Price Variance
Total Overhead Variance
4
Standard Cost
32,010 units of Product A were produced.
Actual direct labor costs were $770,800 for 94,000 direct labor hours worked.
Actual direct materials purchased and used during the year cost $360,250 for 131,000 pounds.
Actual variable overhead incurred was $161,000 and actual fixed overhead incurred was $211,000.
$
$12
24
12
$48
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