Krueger Corporation in Washington, D.C., U.S., recently implemented a standard cost system. The company’s cost accountant has gathered the following information needed to perform a variance analysis at the end of the month: Standard Cost Information Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5 per pound Quantity allowed per unit . . . . . . . . . . . . . . . . . . . . . . . .100 pounds per unit Direct labor rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20.00 per hour Hours allowed per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 hours per unit Fixed overhead budgeted . . . . . . . . . . . . . . . . . . . . . . . . $12,000 per month Normal level of production . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200 units Variable overhead application rate . . . . . . . . . . . . . . . . . . . $ 2.00 per unit Fixed overhead application rate ($12,000 _ 1,200 units) . . . 10.00 per unit Total overhead application rate. . . . . . . . . . . . . . . . . . . . . . $12.00 per unit Actual Cost Information Cost of materials purchased and used . . . . . . . . . . . . . . . . . . . $468,000 Pounds of materials purchased and used . . . . . . . . . . . . . .104,000 pounds Cost of direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $46,480 Hours of direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,240 hours Cost of variable overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$2,352 Cost of fixed overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$12,850 Volume of production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,000 units Instructions 4. Compute the labor efficiency variance. (10%) 5. Compute the overhead spending variance. (10%) 6. Compute the overhead volume variance. (10%)
Krueger Corporation in Washington, D.C., U.S., recently implemented a
Standard Cost Information
Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5 per pound
Quantity allowed per unit . . . . . . . . . . . . . . . . . . . . . . . .100 pounds per unit
Direct labor rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20.00 per hour
Hours allowed per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 hours per unit
Fixed
Normal level of production . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200 units
Variable overhead application rate . . . . . . . . . . . . . . . . . . . $ 2.00 per unit
Fixed overhead application rate ($12,000 _ 1,200 units) . . . 10.00 per unit
Total overhead application rate. . . . . . . . . . . . . . . . . . . . . . $12.00 per unit
Actual Cost Information
Cost of materials purchased and used . . . . . . . . . . . . . . . . . . . $468,000
Pounds of materials purchased and used . . . . . . . . . . . . . .104,000 pounds
Cost of direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $46,480
Hours of direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,240 hours
Cost of variable overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$2,352
Cost of fixed overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$12,850
Volume of production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,000 units
Instructions
4. Compute the labor efficiency variance. (10%)
5. Compute the overhead spending variance. (10%)
6. Compute the overhead volume variance. (10%)
Step by step
Solved in 2 steps
