Straton Industries makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Direct materials 5.8 grams Direct labor 0.5 hours $6.50 per gram $13.50 per hour $2.20 per hour Variable overhead 0.5 hours In August, the company produced 6,000 units using 3,400 direct labor hours and 35,000 grams of direct material. The company purchased 30,000 grams of direct material at a cost of $6.30 per gram. The actual direct labor rate was $13.90 per hour, and the actual variable overhead rate was $2.10 per hour. Variable overhead is applied based on direct labor hours. Required: Compute the variable overhead efficiency variance.

Straton Industries makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Direct materials 5.8 grams Direct labor 0.5 hours $6.50 per gram $13.50 per hour $2.20 per hour Variable overhead 0.5 hours In August, the company produced 6,000 units using 3,400 direct labor hours and 35,000 grams of direct material. The company purchased 30,000 grams of direct material at a cost of $6.30 per gram. The actual direct labor rate was $13.90 per hour, and the actual variable overhead rate was $2.10 per hour. Variable overhead is applied based on direct labor hours. Required: Compute the variable overhead efficiency variance.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter9: Standard Costing: A Functional-based Control Approach

Section: Chapter Questions

Problem 30P: Algers Company produces dry fertilizer. At the beginning of the year, Algers had the following...

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Plata Company has identified the following overhead activities, costs, and activity drivers for the coming year: Plata produces two models of microwave ovens with the following activity demands: The companys normal activity is 21,000 machine hours. Calculate the total overhead cost that would be assigned to Model X using an activity-based costing system: a. 230,000 b. 240,000 c. 280,000 d. 190,000
Business Specialty, Inc., manufactures two staplers: small and regular. The standard quantities of direct labor and direct materials per unit for the year are as follows: The standard price paid per pound of direct materials is 1.60. The standard rate for labor is 8.00. Overhead is applied on the basis of direct labor hours. A plantwide rate is used. Budgeted overhead for the year is as follows: The company expects to work 12,000 direct labor hours during the year; standard overhead rates are computed using this activity level. For every small stapler produced, the company produces two regular staplers. Actual operating data for the year are as follows: a. Units produced: small staplers, 35,000; regular staplers, 70,000. b. Direct materials purchased and used: 56,000 pounds at 1.5513,000 for the small stapler and 43,000 for the regular stapler. There were no beginning or ending direct materials inventories. c. Direct labor: 14,800 hours3,600 hours for the small stapler and 11,200 hours for the regular stapler. Total cost of direct labor: 114,700. d. Variable overhead: 607,500. e. Fixed overhead: 350,000. Required: 1. Prepare a standard cost sheet showing the unit cost for each product. 2. Compute the direct materials price and usage variances for each product. Prepare journal entries to record direct materials activity. 3. Compute the direct labor rate and efficiency variances for each product. Prepare journal entries to record direct labor activity. 4. Compute the variances for fixed and variable overhead. Prepare journal entries to record overhead activity. All variances are closed to Cost of Goods Sold. 5. Assume that you know only the total direct materials used for both products and the total direct labor hours used for both products. Can you compute the total direct materials and direct labor usage variances? Explain.
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