Rouse manufactures coffee mugs that it sells to other companies for customizing with their own logos. Rouse prepares flexible budgets and uses a standard cost system to control manufacturing costs. The standard unit cost of a coffee mug is based on static budge volume of 59,700 coffee mugs per month:Requirement 1. Compute the cost and efficiency variances for direct materials and direct labor.Begin with the cost variances Select the required formulas, compute the cost variances for direct materials and direct labor and identify whether each variance is favorable (F) or unfavorable (U). (Abbreviations used AC = actualco cost AQ = actual quantity, FOH = fixed overheard; SC = standard cost; SQ= standard quantity.) FormulaVarianceDirect materials cost variance(AC - SC) × AQDirect labor cost variance(AC - SC) × AQ - X- XData TableMore InfoDirect Materials (0.2 Ibs @ $0.25 per Ib)2$0.05There were no beginning or ending inventory balances. All expenditures were onaccountActual production and sales were 62,400 coffee mugs.a.Direct Labor (3 minutes @ $0.12 per minute)0.36b.Manufacturing Overhead:Actual direct materials usage was 10,000 Ibs, at an actual cost of $0.17 per Ib.C.Variable (3 minutes @ $0.04 per minute)$ 0.12d. Actual direct labor usage was 203,000 minutes at a total cost of $28,420.0.390.51e. Actual overhead cost was $6,090 variable and $34,610 fixed.Fixed (3 minutes @ $0.13 per minute)f. Selling and administrative costs were $131,000.$ 0.92Total Cost per Coffee MugPrintDonePrintDone

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Description: Rouse manufactures coffee mugs that it sells to other companies for customizing with their own logos. Rouse prepares flexible budgets and uses a standard cost system to control manufacturing costs. The standard unit cost of a coffee mug is based on s

Standard costing: Under this costing method, the expected costs are used in the accounting records…

Answered: Rouse manufactures coffee mugs that it…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Rouse manufactures coffee mugs that it sells to other companies for customizing with their own logos. Rouse prepares flexible budgets and uses a standard cost system to control manufacturing costs. The standard unit cost of a coffee mug is based on static budge volume of 59,700 coffee mugs per month: Requirement 1. Compute the cost and efficiency variances for direct materials and direct labor. Begin with the cost variances Select the required formulas, compute the cost variances for direct materials and direct labor and identify whether each variance is favorable (F) or unfavorable (U). (Abbreviations used AC = actualco cost AQ = actual quantity, FOH = fixed overheard; SC = standard cost; SQ= standard quantity.)

Formula
Variance
Direct materials cost variance
(AC - SC) × AQ
Direct labor cost variance
(AC - SC) × AQ

- X
- X
Data Table
More Info
Direct Materials (0.2 Ibs @ $0.25 per Ib)
2$
0.05
There were no beginning or ending inventory balances. All expenditures were on
account
Actual production and sales were 62,400 coffee mugs.
a.
Direct Labor (3 minutes @ $0.12 per minute)
0.36
b.
Manufacturing Overhead:
Actual direct materials usage was 10,000 Ibs, at an actual cost of $0.17 per Ib.
C.
Variable (3 minutes @ $0.04 per minute)
$ 0.12
d. Actual direct labor usage was 203,000 minutes at a total cost of $28,420.
0.39
0.51
e. Actual overhead cost was $6,090 variable and $34,610 fixed.
Fixed (3 minutes @ $0.13 per minute)
f. Selling and administrative costs were $131,000.
$ 0.92
Total Cost per Coffee Mug
Print
Done
Print
Done

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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