Smith manufactures coffee mugs that it sells to other companies for customizing with their own logos. Smith 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 budget volume of 59,900 coffee muas per month: Requirements Compute the cost and efficiency variances for direct materials and direct labor. 1. 2. Journalize the purchase and usage of direct materials and the assignment of direct labor, including the related variances. 3. 4. For manufacturing overhead, compute the variable overhead cost and efficiency variances and the fixed overhead cost and volume variances. Journalize the actual manufacturing overhead and the allocated manufacturing overhead. Journalize the movement of all production costs from Work-in-Process Inventory. Journalize the adjusting of the Manufacturing Overhead account. 5. Smith intentionally hired more highly skilled workers during July. How did this decision affect the cost variances? Overall, was the decision wise? Print Done -X Data table Actual cost and production information for July 2024 follows: (Click the icon to view actual cost and production information.) a. Direct Materials (0.2 lbs @ $0.25 per lb) Direct Labor (3 minutes @ $0.10 per minute) Manufacturing Overhead: Variable (3 minutes @ $0.06 per minute) Fixed (3 minutes @ $0.13 per minute). Total Cost per Coffee Mug More info $ 0.18 0.39 $ 0.05 0.30 $ e. Actual overhead cost was $7,960 variable and $32,440 fixed. f. Selling and administrative costs were $115,000. 0.57 0.92 There were no beginning or ending inventory balances. All expenditures were on account. b. Actual production and sales were 62,600 coffee mugs. c. Actual direct materials usage was 10,000 lbs. at an actual cost of $0.17 per lb. d. Actual direct labor usage was 199,000 minutes at a total cost of $25,870.
Smith manufactures coffee mugs that it sells to other companies for customizing with their own logos. Smith 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 budget volume of 59,900 coffee muas per month: Requirements Compute the cost and efficiency variances for direct materials and direct labor. 1. 2. Journalize the purchase and usage of direct materials and the assignment of direct labor, including the related variances. 3. 4. For manufacturing overhead, compute the variable overhead cost and efficiency variances and the fixed overhead cost and volume variances. Journalize the actual manufacturing overhead and the allocated manufacturing overhead. Journalize the movement of all production costs from Work-in-Process Inventory. Journalize the adjusting of the Manufacturing Overhead account. 5. Smith intentionally hired more highly skilled workers during July. How did this decision affect the cost variances? Overall, was the decision wise? Print Done -X Data table Actual cost and production information for July 2024 follows: (Click the icon to view actual cost and production information.) a. Direct Materials (0.2 lbs @ $0.25 per lb) Direct Labor (3 minutes @ $0.10 per minute) Manufacturing Overhead: Variable (3 minutes @ $0.06 per minute) Fixed (3 minutes @ $0.13 per minute). Total Cost per Coffee Mug More info $ 0.18 0.39 $ 0.05 0.30 $ e. Actual overhead cost was $7,960 variable and $32,440 fixed. f. Selling and administrative costs were $115,000. 0.57 0.92 There were no beginning or ending inventory balances. All expenditures were on account. b. Actual production and sales were 62,600 coffee mugs. c. Actual direct materials usage was 10,000 lbs. at an actual cost of $0.17 per lb. d. Actual direct labor usage was 199,000 minutes at a total cost of $25,870.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
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.
Topic Video
Question
Transcribed Image Text:Smith manufactures coffee mugs that it sells to other companies for customizing with their own
logos. Smith 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 budget volume of 59,900 coffee
muas per month:
Requirements
1. Compute the cost and efficiency variances for direct materials and direct
labor.
2. Journalize the purchase and usage of direct materials and the assignment of
direct labor, including the related variances.
3.
4.
For manufacturing overhead, compute the variable overhead cost and
efficiency variances and the fixed overhead cost and volume variances.
Journalize the actual manufacturing overhead and the allocated
manufacturing overhead. Journalize the movement of all production costs
from Work-in-Process Inventory. Journalize the adjusting of the Manufacturing
Overhead account.
5. Smith intentionally hired more highly skilled workers during July. How did this
decision affect the cost variances? Overall, was the decision wise?
Print
Done
Actual cost and production information for July 2024 follows:
(Click the icon to view actual cost and production information.)
-X Data table
Direct Materials (0.2 lbs @ $0.25 per lb)
Direct Labor (3 minutes @ $0.10 per minute)
Manufacturing Overhead:
Variable (3 minutes @ $0.06 per minute)
Fixed (3 minutes @ $0.13 per minute)
Total Cost per Coffee Mug
More info
$ 0.18
0.39
$ 0.05
0.30
$
0.57
0.92
a.
There were no beginning or ending inventory balances. All expenditures were on
account.
b. Actual production and sales were 62,600 coffee mugs.
c. Actual direct materials usage was 10,000 lbs. at an actual cost of $0.17 per lb.
d.
Actual direct labor usage was 199,000 minutes at a total cost of $25,870.
e. Actual overhead cost was $7,960 variable and $32,440 fixed.
f. Selling and administrative costs were $115,000.
-
X
>
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 6 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education