Problem 16-71 (Algo) Find Actual and Budget Amounts from Variances (LO 16-5, 6)J&W Corporation manufactures a new electronic game console. The current standard cost sheet for a game console follows. Direct materials, ? kilograms at $6 per kilogram$?per gameDirect labor, 0.75 hours at ? per hour ?per gameOverhead, 0.75 hours at ? per hour ?per gameTotal costs$39per game Assume that the following data appeared in J&W’s records at the end of the past month. Actual production 59,000unitsActual sales 56,000unitsMaterials (131,000 kilograms) ? Materials price variance 58,000UMaterials efficiency variance 42,600UDirect labor price variance 44,550UDirect labor (40,500 hours) 741,150 Underapplied overhead (total) 19,900U There are no materials inventories. Required:a-1. Complete the standard cost sheet for a game console given below.a-2. Prepare a variance analysis for direct materials and direct labor.b. Assume that all production overhead is fixed and that the $19,900 underapplied is the only overhead variance that can be computed. What are the actual and applied overhead amounts?

Name: Problem 16-71 (Algo) Find Actual and Budget Amounts from Variances (LO
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Description: Problem 16-71 (Algo) Find Actual and Budget Amounts from Variances (LO 16-5, 6)J&W Corporation manufactures a new electronic game console. The current standard cost sheet for a game console follows. Direct materials, ? kilograms at $6 per kilogra

Solution: Under the standard Costing method, standard cost is a predetermined cost and is calculated for each product and is used as the cost basis for all such similar produced or manufactured items. In calculating a standard cost, a company must consider how much raw material used and direct labor hours are required to manufacture an item including the quantity, quality, price of the materials used, skills of the employee levels and must include overhead costs also.Analysis and Calculation: variances can be calculated by following formulas, Direct material price variance = actual quantity * (Standard price - Actual price ) Direct material efficiency variance = (Actual usage kilogram - standard usage kilogram) * SP 42,600 Unfavorable = (131,000 kilograms - Standard usage kilogram) * $6 Standard usage kilogram = 138,100 kilograms Standard usage per unit = 2.34 kilograms per unit (138,100/ 59,000 units) Actual direct labor rate is $18.3 ($741,150/40,500 hours). Direct labor price variance is calculated by using the given formula, Direct labor price variance = Direct actual labor hours * (Standard rate - Actual rate ) 44,550 Unfavorable = 40,500 hours * (Standard rate - $18.3) Standard Rate = - (44,550/40,500) + $18.3 Standard rate = $17.2 or = $12.9 per game ($17.2 * 0.75 hours) Direct labor efficiency variance = (standard hours - Actual hours ) * Standard rate Actual hours = 40,500 hours standard hours = 0.75 hours * 59,000 units = 44,250 hours Direct labor efficiency = (44,250 - 40,500 hours ) * $17.2 = 64,500 Favorable a) Standard Cost sheet for a given game console: Standard direct materials per game (2.34 kilogram per unit * $6 per kilogram) $14.04 per game Standard direct labor per game $12.9 Standard overhead per game (balancing fig.) $12.06 Total standard costs per game (given) $39 b) Applied overhead (40,500 hours * $12.9) $522,450 Actual overhead ($522,450 + $19,900) $542,350

Answered: J&W Corporation manufactures a new…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Problem 1Q

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Problem 16-71 (Algo) Find Actual and Budget Amounts from Variances (LO 16-5, 6)

J&W Corporation manufactures a new electronic game console. The current standard cost sheet for a game console follows.


Direct materials, ? kilograms at $6 per kilogram	$	?	per game
Direct labor, 0.75 hours at ? per hour		?	per game
Overhead, 0.75 hours at ? per hour		?	per game
Total costs	$	39	per game

Assume that the following data appeared in J&W’s records at the end of the past month.


Actual production	59,000	units
Actual sales	56,000	units
Materials (131,000 kilograms)	?
Materials price variance	58,000	U
Materials efficiency variance	42,600	U
Direct labor price variance	44,550	U
Direct labor (40,500 hours)	741,150
Underapplied overhead (total)	19,900	U

There are no materials inventories.

Required:

a-1. Complete the standard cost sheet for a game console given below.
a-2. Prepare a variance analysis for direct materials and direct labor.
b. Assume that all production overhead is fixed and that the $19,900 underapplied is the only overhead variance that can be computed. What are the actual and applied overhead amounts?

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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