Stenback manufactures coffee mugs that it sells to other companies for customizing with their own logos. Stenback 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 60,200 coffee mugs per month: Direct Materials (0.2 lbs @ $0.25 per lb) $0.05 Direct Labor (3 minutes @ $0.10 per minute) 0.30 Manufacturing Overhead: Variable (3 minutes @ $0.06 per minute) $0.18 Fixed (3 minutes @ $0.13 per minute) 0.39 0.57 Total Cost per Coffee Mug $0.92 a.There were no beginning or ending inventory balances. All expenditures were on account. b.Actual production and sales were 62,900 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 202,000 minutes at a total cost of $24,240. e. Actual overhead cost was $10,100 variable and $30,800 fixed. f. Selling and administrative costs were $131,000. Select the required formulas, compute the efficiency variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U). 1) Direct materials efficiency variance =(AQ - SQ) × SC = Direct labor efficiency variance = (AQ - SQ) × SC = Now, journalize the usage of direct materials, including the related variance.
Stenback manufactures coffee mugs that it sells to other companies for customizing with their own logos. Stenback 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 60,200 coffee mugs per month: Direct Materials (0.2 lbs @ $0.25 per lb) $0.05 Direct Labor (3 minutes @ $0.10 per minute) 0.30 Manufacturing Overhead: Variable (3 minutes @ $0.06 per minute) $0.18 Fixed (3 minutes @ $0.13 per minute) 0.39 0.57 Total Cost per Coffee Mug $0.92 a.There were no beginning or ending inventory balances. All expenditures were on account. b.Actual production and sales were 62,900 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 202,000 minutes at a total cost of $24,240. e. Actual overhead cost was $10,100 variable and $30,800 fixed. f. Selling and administrative costs were $131,000. Select the required formulas, compute the efficiency variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U). 1) Direct materials efficiency variance =(AQ - SQ) × SC = Direct labor efficiency variance = (AQ - SQ) × SC = Now, journalize the usage of direct materials, including the related variance.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Stenback manufactures coffee mugs that it sells to other companies for customizing with their own logos. Stenback prepares flexible budgets and uses a
Direct Materials (0.2 lbs @ $0.25 per lb) $0.05
Direct Labor (3 minutes @ $0.10 per minute) 0.30
Manufacturing Overhead :
Variable (3 minutes @ $0.06 per minute) $0.18
Fixed (3 minutes @ $0.13 per minute)
0.39
0.57
Total Cost per Coffee Mug
$0.92
a.There were no beginning or ending inventory balances. All expenditures were on account.
b.Actual production and sales were 62,900 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 202,000 minutes at a total cost of $24,240.
e. Actual overhead cost was $10,100 variable and $30,800 fixed.
f. Selling and administrative costs were $131,000.
Select the required formulas, compute the efficiency variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U).
1)
Direct materials efficiency variance
=(AQ - SQ) × SC =
Direct labor efficiency variance
=
(AQ - SQ) × SC =
Now, journalize the usage of direct materials, including the related variance.
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