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I. Prepare a flexible budget for overhead based on the following data: Percent of capacity 90% 100% 110% Direct labor hours 3,600 4,000 4,400 Units of output 900 1,000 1,100 Variable overhead Fixed overhead $3,600 $ 4,000 $ 4,400 $6,000 $ 6,000 Total overhead $9,600 $10,000 $ 6,000 $10,400 II. Normal capacity = 100% and overhead is applied based on direct labor hours Standard overhead rate = $10,000/4,000 = $2.50 per direct labor hour Direct materials are $67.50 per unit. Direct labor is $23.50 per hour. Use the following standard cost card for 1 gallon of ice cream to answer the questions. Product: Gallon of Ice Cream STANDARD COST CARD Manufacturing Standard Cost Information Quantity Standard Cost per Unit Cost Summary Direct Materials Cream 6 quarts $1.00 per quart $6.00 Sugar 15 ounces $0.07 per ounce $1.05 Direct Labor 3 minutes $38.00 per hour $1.90 Total Direct Costs $8.95 Next page 1| Page Actual direct costs incurred to make 50 gallons of ice cream: • 275 quarts of cream at $1.05 per quart . 832 ounces of sugar at $0.075 per ounce • 165 minutes of labor at $37 per hour All materials used were bought during the current period. A. Compute the material and labor variances. B. Comment on the results and possible causes of the variances.

I. Prepare a flexible budget for overhead based on the following data: Percent of capacity 90% 100% 110% Direct labor hours 3,600 4,000 4,400 Units of output 900 1,000 1,100 Variable overhead Fixed overhead $3,600 $ 4,000 $ 4,400 $6,000 $ 6,000 Total overhead $9,600 $10,000 $ 6,000 $10,400 II. Normal capacity = 100% and overhead is applied based on direct labor hours Standard overhead rate = $10,000/4,000 = $2.50 per direct labor hour Direct materials are $67.50 per unit. Direct labor is $23.50 per hour. Use the following standard cost card for 1 gallon of ice cream to answer the questions. Product: Gallon of Ice Cream STANDARD COST CARD Manufacturing Standard Cost Information Quantity Standard Cost per Unit Cost Summary Direct Materials Cream 6 quarts $1.00 per quart $6.00 Sugar 15 ounces $0.07 per ounce $1.05 Direct Labor 3 minutes $38.00 per hour $1.90 Total Direct Costs $8.95 Next page 1| Page Actual direct costs incurred to make 50 gallons of ice cream: • 275 quarts of cream at $1.05 per quart . 832 ounces of sugar at $0.075 per ounce • 165 minutes of labor at $37 per hour All materials used were bought during the current period. A. Compute the material and labor variances. B. Comment on the results and possible causes of the variances.

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter4: Job Order Costing
Section: Chapter Questions
Problem 7EA: A company estimates its manufacturing overhead will be $750,000 for the next year. What is the...
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I. Prepare a flexible budget for overhead based on the following data: Percent of capacity 90% 100% 110% Direct labor hours 3,600 4,000 4,400 Units of output 900 1,000 1,100 Variable overhead Fixed overhead $3,600 $ 4,000 $ 4,400 $6,000 $ 6,000 Total overhead $9,600 $10,000 $ 6,000 $10,400 II. Normal capacity = 100% and overhead is applied based on direct labor hours Standard overhead rate = $10,000/4,000 = $2.50 per direct labor hour Direct materials are $67.50 per unit. Direct labor is $23.50 per hour. Use the following standard cost card for 1 gallon of ice cream to answer the questions. Product: Gallon of Ice Cream STANDARD COST CARD Manufacturing Standard Cost Information Quantity Standard Cost per Unit Cost Summary Direct Materials Cream 6 quarts $1.00 per quart $6.00 Sugar 15 ounces $0.07 per ounce $1.05 Direct Labor 3 minutes $38.00 per hour $1.90 Total Direct Costs $8.95 Next page 1| Page Actual direct costs incurred to make 50 gallons of ice cream: • 275 quarts of cream at $1.05 per quart . 832 ounces of sugar at $0.075 per ounce • 165 minutes of labor at $37 per hour All materials used were bought during the current period. A. Compute the material and labor variances. B. Comment on the results and possible causes of the variances.
Transcribed Image Text:I. Prepare a flexible budget for overhead based on the following data: Percent of capacity 90% 100% 110% Direct labor hours 3,600 4,000 4,400 Units of output 900 1,000 1,100 Variable overhead Fixed overhead $3,600 $ 4,000 $ 4,400 $6,000 $ 6,000 Total overhead $9,600 $10,000 $ 6,000 $10,400 II. Normal capacity = 100% and overhead is applied based on direct labor hours Standard overhead rate = $10,000/4,000 = $2.50 per direct labor hour Direct materials are $67.50 per unit. Direct labor is $23.50 per hour. Use the following standard cost card for 1 gallon of ice cream to answer the questions. Product: Gallon of Ice Cream STANDARD COST CARD Manufacturing Standard Cost Information Quantity Standard Cost per Unit Cost Summary Direct Materials Cream 6 quarts $1.00 per quart $6.00 Sugar 15 ounces $0.07 per ounce $1.05 Direct Labor 3 minutes $38.00 per hour $1.90 Total Direct Costs $8.95 Next page 1| Page Actual direct costs incurred to make 50 gallons of ice cream: • 275 quarts of cream at $1.05 per quart . 832 ounces of sugar at $0.075 per ounce • 165 minutes of labor at $37 per hour All materials used were bought during the current period. A. Compute the material and labor variances. B. Comment on the results and possible causes of the variances.
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