Maple Leaf Production manufactures truck tires. The following information is available for the last operating period. Maple Leaf produced and sold 92,000 tires for $40 each. Budgeted production was 100,000 tires. Standard variable costs per tire follow. Direct materials: 4 pounds at $2 $ 8.00 Direct labor: 0.4 hours at $18 7.20 Variable production overhead: 0.18 machine-hours at $10 per hour 1.80 Total variable costs $ 17.00 Fixed production overhead costs: Monthly budget $1,350,000 Fixed overhead is applied at the rate of $15.00 per tire. Actual production costs: Direct materials purchased and used: 384,000 pounds at $1.80 $ 691,200 Direct labor: 35,200 hours at $18.40 647,680 Variable overhead: 17,280 machine-hours at $10.20 per hour 176,256 Fixed overhead 1,360,000 Required: a. Prepare a cost variance analysis for each variable cost for Maple Leaf Productions. b. Prepare a fixed overhead cost variance analysis. c. (Appendix) Prepare the journal entries to record the activity for the last period using standard costing. Assume that all variances are closed to cost of goods sold at the end of the operating period.
Maple Leaf Production manufactures truck tires. The following information is available for the last operating period. Maple Leaf produced and sold 92,000 tires for $40 each. Budgeted production was 100,000 tires. Standard variable costs per tire follow. Direct materials: 4 pounds at $2 $ 8.00 Direct labor: 0.4 hours at $18 7.20 Variable production overhead: 0.18 machine-hours at $10 per hour 1.80 Total variable costs $ 17.00 Fixed production overhead costs: Monthly budget $1,350,000 Fixed overhead is applied at the rate of $15.00 per tire. Actual production costs: Direct materials purchased and used: 384,000 pounds at $1.80 $ 691,200 Direct labor: 35,200 hours at $18.40 647,680 Variable overhead: 17,280 machine-hours at $10.20 per hour 176,256 Fixed overhead 1,360,000 Required: a. Prepare a cost variance analysis for each variable cost for Maple Leaf Productions. b. Prepare a fixed overhead cost variance analysis. c. (Appendix) Prepare the journal entries to record the activity for the last period using standard costing. Assume that all variances are closed to cost of goods sold at the end of the operating period.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Maple Leaf Production manufactures truck tires. The following information is available for the last operating period.
- Maple Leaf produced and sold 92,000 tires for $40 each. Budgeted production was 100,000 tires.
- Standard variable costs per tire follow.
| Direct materials: 4 pounds at $2 | $ | 8.00 | |
| Direct labor: 0.4 hours at $18 | 7.20 | ||
| Variable production |
1.80 | ||
| Total variable costs | $ | 17.00 | |
- Fixed production overhead costs:
Monthly budget $1,350,000
- Fixed overhead is applied at the rate of $15.00 per tire.
- Actual production costs:
| Direct materials purchased and used: 384,000 pounds at $1.80 | $ | 691,200 | |
| Direct labor: 35,200 hours at $18.40 | 647,680 | ||
| Variable overhead: 17,280 machine-hours at $10.20 per hour | 176,256 | ||
| Fixed overhead | 1,360,000 | ||
Required:
a. Prepare a cost
b. Prepare a fixed overhead cost variance analysis.
c. (Appendix) Prepare the
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