Problem #8: Standard Costing and Variances Jake's Cheese Company produces gourmet cheese for resale at local grocery stores. The master budget indicates that the company expects to use 3.0 pounds of direct materials for each unit produced at a cost of $8.00 per pound (one unit = one batch of cheese). Each unit produced will require 0.50 direct labor hours at a cost of $10.00 per hour. Variable manufacturing overhead is applied based on direct labor hours at a rate of $5.00 per hour. Last year's sales were expected to total 50,000 units. Jake just received last year's actual results showing sales of 45,000 units. Required: (1) Calculate the standard cost per unit for direct materials, direct labor, and variable manufacturing overhead. (2) Prepare a flexible budget based on actual sales for direct materials, direct labor, and variable manufacturing overhead.

Problem #8: Standard Costing and Variances Jake's Cheese Company produces gourmet cheese for resale at local grocery stores. The master budget indicates that the company expects to use 3.0 pounds of direct materials for each unit produced at a cost of $8.00 per pound (one unit = one batch of cheese). Each unit produced will require 0.50 direct labor hours at a cost of $10.00 per hour. Variable manufacturing overhead is applied based on direct labor hours at a rate of $5.00 per hour. Last year's sales were expected to total 50,000 units. Jake just received last year's actual results showing sales of 45,000 units. Required: (1) Calculate the standard cost per unit for direct materials, direct labor, and variable manufacturing overhead. (2) Prepare a flexible budget based on actual sales for direct materials, direct labor, and variable manufacturing overhead.

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Description: Problem #8: Standard Costing and VariancesJake's Cheese Company produces gourmet cheese for resale at local grocery stores. The master budget indicates that thecompany expects to use 3.0 pounds of direct materials for each unit produced at a cost of

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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Problem #8: Standard Costing and Variances Jake’s Cheese Company produces gourmet cheese for resale at local grocery stores. The master budget indicates that the company expects to use 3.0 pounds of direct materials for each unit produced at a cost of $8.00 per pound (one unit = one batch of cheese). Each unit produced will require 0.50 direct labor hours at a cost of $10.00 per hour. Variable manufacturing overhead is applied based on direct labor hours at a rate of $5.00 per hour. Last year's sales were expected to total 50,000 units. Jake just received last year's actual results showing sales of 45,000 units. Required: (1) Calculate the standard cost per unit for direct materials, direct labor, and variable manufacturing overhead. (2) Prepare a flexible budget based on actual sales for direct materials, direct labor, and variable manufacturing overhead.
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Problem #11: Standard Costing & Variances Jake's cheese Company produces gourmet cheese for resale at local grocery stores. Jake's expected to use 0.50 direct labor hours to produce one unit (batch) of product, and the variable overhead rate is $5.00 per hour. Actual results are in for last year, which indicates 45,000 batches of cheese were produced and sold. The company's direct labor workforce worked 27,500 hours, and variable overhead costs totaled $144,000. Required: (1) Calculate the variable overhead spending variance. (2) Calculate the variable overhead efficiency variance. (3) Suggest several possible reasons for the variable overhead spending and efficiency variances.
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