Can you assist in how to obtain the numbers for the attached diagram.Managerial accounting 23-3B **Chapter 23, Problem 3PB****Textbook Problem****Direct materials, direct labor, and factory overhead cost variance analysis**Road Gripper Tire Co. manufactures automobile tires. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 4,160 tires were as follows:| | **Standard Costs** | **Actual Costs** ||------------------------|--------------------------------------|---------------------------------|| **Direct materials** | 100,000 lbs. at $6.40 | 101,000 lbs. at $6.50 || **Direct labor** | 2,080 hrs. at $15.75 | 2,000 hrs. at $15.40 || **Factory overhead** | Rates per direct labor hr., | || | based on 100% of normal | || | capacity of 2,000 direct | || | labor hrs: | || | Variable cost, $4.00 | $8,200 variable cost || | Fixed cost, $6.00 | $12,000 fixed cost |This table compares the standard costs and actual costs for the production components involved, allowing for analysis of cost variances in materials, labor, and overhead. **Title: Understanding Factory Overhead and Variance Analysis**This diagram illustrates the components and analysis of factory overhead, focusing on actual costs, applied costs, and the resulting variances. Here's an explanation of the diagram:1. **Factory Overhead:** - This is divided into two main components: Actual Costs and Applied Costs. - **Actual Costs Balance:** The actual costs incurred for factory overhead. - **Applied Costs:** These are predetermined overhead rates applied based on certain activities or cost drivers.2. **Actual Factory Overhead:** - Represents the total overhead costs actually incurred.3. **Budgeted Factory Overhead for Amount Produced:** - Consists of: - **Variable Cost:** Costs that change with the level of production. - **Fixed Cost:** Costs that remain constant regardless of production level. - **Total:** The sum of variable and fixed costs.4. **Variance Analysis:** - **Controllable Variance:** This is the difference between actual factory overhead and budgeted factory overhead. It shows the efficiency of cost control. - **Volume Variance:** This variance indicates the difference due to the actual production volume being different from the expected production volume.5. **Total Factory Overhead Cost Variance:** - This is the overall variance that combines the controllable and volume variance, providing insight into total deviations in overhead costs. This diagram is crucial for understanding how overhead costs are managed and analyzed in manufacturing, allowing for better financial planning and control.

Variance analysis is the study or analysis of the actual behaviour or data and the forecasted data. It helps in analyzing the impact of these differences on the profits of the business.Direct Material Price Variance= (Standard Price- Actual price)x Actual Quantity =(6.4-6.5) x 101000 = $10100 Unfavorable Direct Material Quantity Variance=(Standard Quantity- Actual Quantity)x Standard Price =(100000-101000) x 6.4 = $6400 Unfavorable Direct material cost variance= 10100+6400= $16500 Unfavorable Direct Labor rate variance=(Standard Rate-Actual Rate)x Actual Hours =(15.75-15.40) x 2000 =$ 700 Favorable Direct Labor Quantity variance= (Standard hours- Actual Hours) x Standard Rate =(2080-2000) x 15.75 = $1260 Favorable Direct Labor Cost Variance= 700+1260= $ 1960 Favorable Variable Factory overhead controllable variance=Actual variable factory overhead incurred- Standard variable factory overhead for actual hours = 8200-8000= $200 Favorable Fixed Factory overhead controllable variance=(Standard hours for quantity produced- hours at normal capacity) x Standard fixed overhead cost rate = (2080-2000)x 6= $480 Favorable Factory overhead cost variance= 200+480= $680 Favorable

Business

Accounting

Direct materials, direct labor, and factory overhead cost variance analysis Road Gripper Tire Co. manufactures automobile tires. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 4,160 tires were as follows: Standard Costs Actual Costs 101,000 Ibs. at 56.50 2.000 hrs. at $15.40 Direct materials 100,000 lbs at 56.40 2,080 hrs. at $1575 Rates per direct labor hr. Direct labor Factory overhead based on 100% of normal capacity of 2,000 direct labor hrs: Variable cost, $4.00 $8.200 variable cost Foxed cost, $6.00 $12.000 fxed cost

Direct materials, direct labor, and factory overhead cost variance analysis Road Gripper Tire Co. manufactures automobile tires. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 4,160 tires were as follows: Standard Costs Actual Costs 101,000 Ibs. at 56.50 2.000 hrs. at $15.40 Direct materials 100,000 lbs at 56.40 2,080 hrs. at $1575 Rates per direct labor hr. Direct labor Factory overhead based on 100% of normal capacity of 2,000 direct labor hrs: Variable cost, $4.00 $8.200 variable cost Foxed cost, $6.00 $12.000 fxed cost

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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