Per unit Cost 15 min. $8.00 per hr. Predetermined overhead rate based on direct labor hours = $3.83 Item Labor The January figures for purchasing, production, and labor are: The company purchased 230,100 pounds of raw materials in January at a cost of 78¢ a pound. Production used 230,100 pounds of raw materials to make 116,000 units in January. Direct labor spent 18 minutes on each product at a cost of $7.80 per hour. Overhead costs for January totaled $41,342 variable and $75,000 fixed. Answer the following questions about standard costs,
Per unit Cost 15 min. $8.00 per hr. Predetermined overhead rate based on direct labor hours = $3.83 Item Labor The January figures for purchasing, production, and labor are: The company purchased 230,100 pounds of raw materials in January at a cost of 78¢ a pound. Production used 230,100 pounds of raw materials to make 116,000 units in January. Direct labor spent 18 minutes on each product at a cost of $7.80 per hour. Overhead costs for January totaled $41,342 variable and $75,000 fixed. Answer the following questions about standard costs,
Chapter1: Financial Statements And Business Decisions
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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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Transcribed Image Text:Item
Labor
Direct Tabor
Per unit
$8.00 per hr.
Predetermined overhead rate based on direct labor hours $3.83
15 min.
Cost
The January figures for purchasing, production, and labor are:
The company purchased 230,100 pounds of raw materials in January at a cost of 78¢ a pound.
Production used 230,100 pounds of raw materials to make 116,000 units in January.
Direct labor spent 18 minutes on each product at a cost of $7.80 per hour.
Overhead costs for January totaled $41,342 variable and $75,000 fixed.
Answer the following questions about standard costs,
Labor price variance $
What is the labor price variance? (Round per unit calculations to 2 decimal places, e.g. 1.25 and final answer to 0 decimal
places, e.g. 125.)
Favorable
Transcribed Image Text:Waterways Corporation uses very stringent standard costs in evaluating its manufacturing efficiency. These standards are not "ideal"
at this point, but the management is working toward that as a goal. At present, the company uses the following standards.
Item
Materials
Materials
Item
Labor
Per unit
2 lb.
Direct labor
Cost
80.00€ per lb.
Per unit
Cost
15 min.
$8.00 per hr.
Predetermined overhead rate based on direct labor hours $3.83
The January figures for purchasing, production, and labor are:
The company purchased 230,100 pounds of raw materials in January at a cost of 78¢ a pound.
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