Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis Santiago Inc. processes a base chemical into plastic. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 40,000 units of product were as follows: Standard Costs 240,000 lbs. at $6.40 per lb. 12,000 hrs. at $24.20 per hr. Rates per direct labor hr., based on 100% of normal capacity of 15,000 direct labor hrs.: Variable cost, $2.50 Fixed cost, $5.00 Each unit requires 0.3 hour of direct labor. Required: Direct materials Direct labor Factory overhead Actual Costs 237,000 lbs. at $6.50 per lb. 11,500 hrs. at $25.00 per hr $32,400 variable cost $75,000 fixed cost

Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis Santiago Inc. processes a base chemical into plastic. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 40,000 units of product were as follows: Standard Costs 240,000 lbs. at $6.40 per lb. 12,000 hrs. at $24.20 per hr. Rates per direct labor hr., based on 100% of normal capacity of 15,000 direct labor hrs.: Variable cost, $2.50 Fixed cost, $5.00 Each unit requires 0.3 hour of direct labor. Required: Direct materials Direct labor Factory overhead Actual Costs 237,000 lbs. at $6.50 per lb. 11,500 hrs. at $25.00 per hr $32,400 variable cost $75,000 fixed cost

Name: How to determine the variable factory overhead controllable variance,
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Description: How to determine the variable factory overhead controllable variance, fixed factory overhead volume variance, and total factory overhead cost variance? Direct Materials, Direct Labor, and Factory Overhead Cost Variance AnalysisSantiago Inc. processes

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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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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How to determine the variable factory overhead controllable variance, fixed factory overhead volume variance, and total factory overhead cost variance?

Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis
Santiago Inc. processes a base chemical into plastic. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 40,000 units of product were as follows:
Standard Costs
Direct materials
Direct labor
Factory overhead
240,000 lbs. at $6.40 per lb.
12,000 hrs. at $24.20 per hr.
Rates per direct labor hr., based on 100% of normal.
capacity of 15,000 direct labor hrs.:
Variable cost, $2.50
Fixed cost, $5.00
Each unit requires 0.3 hour of direct labor.
Required:
Actual Costs
237,000 lbs. at $6.50 per lb.
11,500 hrs. at $25.00 per hr
$32,400 variable cost
$75,000 fixed cost

Definition Definition Total cost of procuring or producing a product or the cost that an individual or business owner undertakes for the manufacturing of goods.

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