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Sweetwater Company manufactures two products, Mountain Mist and Valley Stream. The company prepares its master budget on the basis of standard costs. The following data are for March. Standards Direct materials Direct labor Variable overhead (per direct labor-hour) Fixed overhead (per month) Expected activity (direct labor-hours) Actual results Mountain Mist 3 ounces at $14.70 per ounce 5 hours at $60.30 per hour $48 $360,905 6,550 Valley Stream 4 ounces at $17.30 per ounce 6 hours at $79 per hour $53.30 $399,360 7,800

Sweetwater Company manufactures two products, Mountain Mist and Valley Stream. The company prepares its master budget on the basis of standard costs. The following data are for March. Standards Direct materials Direct labor Variable overhead (per direct labor-hour) Fixed overhead (per month) Expected activity (direct labor-hours) Actual results Mountain Mist 3 ounces at $14.70 per ounce 5 hours at $60.30 per hour $48 $360,905 6,550 Valley Stream 4 ounces at $17.30 per ounce 6 hours at $79 per hour $53.30 $399,360 7,800

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Problem 16-73 (Algo) Comprehensive Variance Problem (LO 16-5, 6) Sweetwater Company manufactures two products, Mountain Mist and Valley Stream. The company prepares its master budget on the basis of standard costs. The following data are for March. Standards Direct materials Direct labor Variable overhead (per direct labor-hour) Fixed overhead (per month) Expected activity (direct labor-hours) Actual results Direct material (purchased and used) Direct labor Variable overhead Fixed overhead Units produced (actual) Direct materials Direct labor Variable overhead Fixed overhead Mountain Mist Price Variance U U Required: a. Prepare a variance analysis for each variable cost for each product. b. Prepare a fixed overhead variance analysis for each product. (For all requirements, Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.) Mountain Mist 3 ounces at $14.70 per ounce 5 hours at $60.30 per hour $48 $360,905 6,550 Price Variance 3,900 ounces at $14.30 per ounce 4,980 hours at $62.75 per hour Efficiency Variance U $260,550 $324,950 1,080 units Production Volume Variance U Valley Stream Price Variance |U U Valley Stream 4 ounces at $17.30 per ounce 6 hours at $79 per hour $53.30 $399,360 7,800 4,800 ounces at $19.25 per ounce 7,490 hours at $83.60 per hour $386,510 $399, 200 1,230 units Price Variance F Efficiency Variance F U U Production Volume Variance U
Transcribed Image Text:Problem 16-73 (Algo) Comprehensive Variance Problem (LO 16-5, 6) Sweetwater Company manufactures two products, Mountain Mist and Valley Stream. The company prepares its master budget on the basis of standard costs. The following data are for March. Standards Direct materials Direct labor Variable overhead (per direct labor-hour) Fixed overhead (per month) Expected activity (direct labor-hours) Actual results Direct material (purchased and used) Direct labor Variable overhead Fixed overhead Units produced (actual) Direct materials Direct labor Variable overhead Fixed overhead Mountain Mist Price Variance U U Required: a. Prepare a variance analysis for each variable cost for each product. b. Prepare a fixed overhead variance analysis for each product. (For all requirements, Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.) Mountain Mist 3 ounces at $14.70 per ounce 5 hours at $60.30 per hour $48 $360,905 6,550 Price Variance 3,900 ounces at $14.30 per ounce 4,980 hours at $62.75 per hour Efficiency Variance U $260,550 $324,950 1,080 units Production Volume Variance U Valley Stream Price Variance |U U Valley Stream 4 ounces at $17.30 per ounce 6 hours at $79 per hour $53.30 $399,360 7,800 4,800 ounces at $19.25 per ounce 7,490 hours at $83.60 per hour $386,510 $399, 200 1,230 units Price Variance F Efficiency Variance F U U Production Volume Variance U
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