Sheridan Industries produces a cleaning product that works for the peskiest stains. It's pricey, but less expensive than hiring a professional cleaning service. The managers at Sheridan are conducting variance analysis at the end of January, the first month of the new fiscal year. Budgeted fixed-MOH costs for the year were $2.352.000. The company's standards for one gallon of cleaning solution are as follows, along with actual information for the month. DM DL Variable-MOH Fixed-MOH Actual results for January . . . . . Standard Quantity per Unit 0.5 gallons of solution 0.3 DL hours 2.0 machine hours 2.0 machine hours . Standard Price $18.00 per gallon $16.00 per DL hour $2.40 per machine hour $4.00 per machine hour 24,000 gallons were actually produced. Cost of DM purchased was $249,750 for 13.500 gallons of solution DM used in production was 11.760 gallons Cost of DL was $116,064 for 7,440 DL hours worked. Variable-MOH cost was $118.440 for 50,400 machine hours used. Fixed-MOH cost was $211.680.
Sheridan Industries produces a cleaning product that works for the peskiest stains. It's pricey, but less expensive than hiring a professional cleaning service. The managers at Sheridan are conducting variance analysis at the end of January, the first month of the new fiscal year. Budgeted fixed-MOH costs for the year were $2.352.000. The company's standards for one gallon of cleaning solution are as follows, along with actual information for the month. DM DL Variable-MOH Fixed-MOH Actual results for January . . . . . Standard Quantity per Unit 0.5 gallons of solution 0.3 DL hours 2.0 machine hours 2.0 machine hours . Standard Price $18.00 per gallon $16.00 per DL hour $2.40 per machine hour $4.00 per machine hour 24,000 gallons were actually produced. Cost of DM purchased was $249,750 for 13.500 gallons of solution DM used in production was 11.760 gallons Cost of DL was $116,064 for 7,440 DL hours worked. Variable-MOH cost was $118.440 for 50,400 machine hours used. Fixed-MOH cost was $211.680.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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:Sheridan Industries produces a cleaning product that works for the peskiest stains. It's pricey, but less expensive than hiring a
professional cleaning service. The managers at Sheridan are conducting variance analysis at the end of January, the first month of the
new fiscal year. Budgeted fixed-MOH costs for the year were $2,352,000. The company's standards for one gallon of cleaning solution
are as follows, along with actual information for the month.
DM
DL
Variable-MOH
Fixed-MOH
Actual results for January
.
.
.
.
.
Standard Quantity per Unit
0.5 gallons of solution
0.3 DL hours
2.0 machine hours
2.0 machine hours
(a)
Standard Price
$18.00 per gallon
$16.00
per DL hour
$2.40 per machine hour
$4.00 per machine hour
24,000 gallons were actually produced.
Cost of DM purchased was $249,750 for 13,500 gallons of solution
DM used in production was 11,760 gallons
Cost of DL was $116,064 for 7,440 DL hours worked.
Variable-MOH cost was $118.440 for 50,400 machine hours used
Fixed-MOH cost was $211,680,
Determine the DM, DL, and variable-MOH price and efficiency variances for the month.
Transcribed Image Text:Determine the DM, DL, and variable-MOH price and efficiency variances for the month.
Price variance
Efficiency variance
DM
SA
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