Having joined the company as a fresh graduate , the CFO call you to her office an gave you a report that shows the direct cost categories and budgeted amounts for the widgets that your company manufactures: Standard Costs Input per One output unit Cost per input Direct Materials 1.00 KG $7.50/KG Direct Labor 0.30 HR $9.00/HR Direct Marketing 0.50 HR $3.00/HR Actual performance for the company is shown below based on 4,000 Actual Unit produced: Direct Materials: Direct Manufacturing labor: Direct Marketing labor: Materials costs Labor costs $11,470 Labor costs $5,880 $30,225 Labor-hours of input Labor-hours of input Input purchased and used 3,900 1,240 2,100 Actual price per hour Actual price per Actual price per input $9.25 hour $2.80 $7.75

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Having joined the company as a fresh graduate, the CFO call you to her office an gave you a report that shows
the direct cost categories and budgeted amounts for the widgets that your company manufactures:
Standard Costs
Input per One output unit Cost per input
Direct Materials
1.00 KG
$7.50/KG
Direct Labor
0.30 HR
$9.00/HR
Direct Marketing
0.50 HR
$3.00/HR
Actual performance for the company is shown below based on 4,000 Actual Unit produced:
Direct Materials:
Direct Manufacturing labor: Direct Marketing labor:
Materials costs
Labor costs $11,470
Labor costs $5,880
$30,225
Labor-hours of input
Labor-hours of input
Input purchased and used
1,240
2,100
3,900
Actual price per hour
Actual price per
Actual price per input
$9.25
hour
$2.80
$7.75
Required:
Prepare a report to address the following requirement s below and explain the potential causes of variances if
they exist
1. What is the combined total of the flexible-budget variances?
2. What is the rate variance of the direct materials?
3. What is the rate variance of the direct manufacturing labor and the direct marketing labor, respectively?
4. What is the efficiency variance for direct materials?
5. What are the efficiency variances for direct manufacturing labor and direct marketing labor, respectively?
Transcribed Image Text:Having joined the company as a fresh graduate, the CFO call you to her office an gave you a report that shows the direct cost categories and budgeted amounts for the widgets that your company manufactures: Standard Costs Input per One output unit Cost per input Direct Materials 1.00 KG $7.50/KG Direct Labor 0.30 HR $9.00/HR Direct Marketing 0.50 HR $3.00/HR Actual performance for the company is shown below based on 4,000 Actual Unit produced: Direct Materials: Direct Manufacturing labor: Direct Marketing labor: Materials costs Labor costs $11,470 Labor costs $5,880 $30,225 Labor-hours of input Labor-hours of input Input purchased and used 1,240 2,100 3,900 Actual price per hour Actual price per Actual price per input $9.25 hour $2.80 $7.75 Required: Prepare a report to address the following requirement s below and explain the potential causes of variances if they exist 1. What is the combined total of the flexible-budget variances? 2. What is the rate variance of the direct materials? 3. What is the rate variance of the direct manufacturing labor and the direct marketing labor, respectively? 4. What is the efficiency variance for direct materials? 5. What are the efficiency variances for direct manufacturing labor and direct marketing labor, respectively?
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