Starbright manufactures children car seats, strollers, and baby swings. Starbright’s manufacturing costs are budgeted as follows: Factory utilities $105,000 Factory foremen salaries $75,000 Machinery setup costs $30,000 Total manufacturing overhead $210,000 The company uses activity-based costing to allocate its manufacturing overhead costs to products based on the following schedule: Overhead Cost Allocation Base Estimated Activity Level Factory Utilities Direct labor hours 14,258 Factory foremen salaries Machine hours 21,000 Setup costs Number of production runs 83 During the current month, the following levels of activities were incurred: Car Seats Strollers Baby Swings Total Direct Labor Costs $ 55,425 $ 84,423 $ 31,258 $ 171,106 Direct Labor Hours 4,619 7,035 2,604 14,258 Machine Hours 7,500 10,250 3,250 21,000 Production Runs 25 40 18 83 Units Produced 1,500 2,500 750 4,750 What are the factory foremen salaries allocated to Car Seats during the current month? (Round to the nearest dollar.)
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.
Starbright manufactures children car seats, strollers, and baby swings. Starbright’s
Factory utilities $105,000
Factory foremen salaries $75,000
Machinery setup costs $30,000
Total manufacturing
The company uses activity-based costing to allocate its manufacturing overhead costs to products based on the following schedule:
| Overhead Cost | Allocation Base | Estimated Activity Level |
| Factory Utilities | Direct labor hours | 14,258 |
| Factory foremen salaries | Machine hours | 21,000 |
| Setup costs | Number of production runs | 83 |
During the current month, the following levels of activities were incurred:
| Car Seats |
Strollers | Baby Swings | Total | |||||||||
| Direct Labor Costs | $ | 55,425 | $ | 84,423 | $ | 31,258 | $ | 171,106 | ||||
| Direct Labor Hours | 4,619 | 7,035 | 2,604 | 14,258 | ||||||||
| Machine Hours | 7,500 | 10,250 | 3,250 | 21,000 | ||||||||
| Production Runs | 25 | 40 | 18 | 83 | ||||||||
| Units Produced | 1,500 | 2,500 | 750 | 4,750 |
What are the factory foremen salaries allocated to Car Seats during the current month? (Round to the nearest dollar.)
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