Input Cost/Block Direct materials 0.5 Ib. @ $12/lb. $ 6.00 Direct manufacturing labour 1.4 hours @ $20/hour 28.00 Manufacturing overhead: Variable $6/lb. 0.5 lb. 3.00 Fixed $15/lb. 0.3 Ib. 4.50 Standard cost per block $41.50 Actual results for April 2021 were as follows: Production 24,000 blocks Direct materials purchased 12,000 lb. at $13/lb. Direct materials used 11,450 lb. Direct manufacturing labour 38,000 hours for $798000 Variable manufacturing overhead $68,150 Fixed manufacturing overhead $155,000

Input Cost/Block Direct materials 0.5 Ib. @ $12/lb. $ 6.00 Direct manufacturing labour 1.4 hours @ $20/hour 28.00 Manufacturing overhead: Variable $6/lb. 0.5 lb. 3.00 Fixed $15/lb. 0.3 Ib. 4.50 Standard cost per block $41.50 Actual results for April 2021 were as follows: Production 24,000 blocks Direct materials purchased 12,000 lb. at $13/lb. Direct materials used 11,450 lb. Direct manufacturing labour 38,000 hours for $798000 Variable manufacturing overhead $68,150 Fixed manufacturing overhead $155,000

Name: a. Direct materials price variance (based on purchases) b. Direct mate
Uploaded: 2024-03-20T06:33:06.000Z
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Description: a. Direct materials price variance (based on purchases) b. Direct materials efficiency variance c. Direct manufacturing labour price variance InputCost/Block0.5 lb. @ $12/lb.$ 6.00Direct materialsDirect manufacturing labour1.4 hours @ $20/hour28.00Ma

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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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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Question

a. Direct materials price variance (based on purchases)
b. Direct materials efficiency variance

c. Direct manufacturing labour price variance

Input
Cost/Block
0.5 lb. @ $12/lb.
$ 6.00
Direct materials
Direct manufacturing labour
1.4 hours @ $20/hour
28.00
Manufacturing overhead:
Variable
$6/lb. 0.5 Ib.
3.00
Fixed
$15/lb. 0.3 lb.
4.50
Standard cost per block
$41.50
Actual results for April 2021 were as follows:
Production
24,000 blocks
Direct materials purchased
12,000 Ib. at $13/1lb.
Direct materials used
11,450 lb.
Direct manufacturing labour
38,000 hours for $798000
Variable manufacturing overhead
$68,150
Fixed manufacturing overhead
$155,000

Don Johnson is the management accountant for Cari-Blocks (CB), which manufactures
specialty blocks. CB uses two direct cost categories: direct materials and direct
manufacturing labour. Johnson feels that manufacturing overhead is most closely related to
material usage. Therefore, CB allocates manufacturing overhead to production based upon
pounds of materials used.
At the beginning of 2021, CB budgeted annual production of 200,000 blocks and adopted the
following standards for each block:

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