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The following standard costs were developed for Product A at Larry Corporation. Budgeted production for the year is 10,000 units, and overhead is applied on the basis of direct labor hours. The master budget is as follows: Product A budget data Direct materials Direct labor (DL) Variable overhead Fixed overhead Total budgeted cost Product A production data Units produced: Materials purchased: Materials used: Direct labor: (40,000 feet x $14.00 per foot) (60,000 DL hours x $10.00 per hour) Fixed overhead incurred: (60,000 DL hours x $8.00 per hour) The following actual information is available for the production of Product A for the period: $720,000 $2,360,000 Variable overhead incurred: 9,500 39,500 feet @ $13.80 per foot 39,500 feet 56,000 hours, costing $560,000 $470,000 $560,000 $720,000 $600,000 $480,000 Required: Calculate the dollar amount and label the following variances as "favorable" or "unfavorable": Direct materials price variance Direct materials quantity variance Direct labor efficiency variance

The following standard costs were developed for Product A at Larry Corporation. Budgeted production for the year is 10,000 units, and overhead is applied on the basis of direct labor hours. The master budget is as follows: Product A budget data Direct materials Direct labor (DL) Variable overhead Fixed overhead Total budgeted cost Product A production data Units produced: Materials purchased: Materials used: Direct labor: (40,000 feet x $14.00 per foot) (60,000 DL hours x $10.00 per hour) Fixed overhead incurred: (60,000 DL hours x $8.00 per hour) The following actual information is available for the production of Product A for the period: $720,000 $2,360,000 Variable overhead incurred: 9,500 39,500 feet @ $13.80 per foot 39,500 feet 56,000 hours, costing $560,000 $470,000 $560,000 $720,000 $600,000 $480,000 Required: Calculate the dollar amount and label the following variances as "favorable" or "unfavorable": Direct materials price variance Direct materials quantity variance Direct labor efficiency variance

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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The following standard costs were developed for Product A at Larry Corporation. Budgeted production for the year is 10,000 units, and overhead is applied on the basis of direct labor hours. The master budget is as follows: Product A budget data Direct materials Direct labor (DL) Variable overhead Fixed overhead Total budgeted cost Product A production data Units produced: Materials purchased: Materials used: Direct labor: (40,000 feet x $14.00 per foot) (60,000 DL hours x $10.00 per hour) Fixed overhead incurred: (60,000 DL hours x $8.00 per hour) The following actual information is available for the production of Product A for the period: $720,000 $2,360,000 Variable overhead incurred: 9,500 39,500 feet @ $13.80 per foot 39,500 feet 56,000 hours, costing $560,000 $470,000 $560,000 $720,000 $600,000 $480,000 Required: Calculate the dollar amount and label the following variances as "favorable" or "unfavorable": Direct materials price variance Direct materials quantity variance Direct labor efficiency variance
Transcribed Image Text:The following standard costs were developed for Product A at Larry Corporation. Budgeted production for the year is 10,000 units, and overhead is applied on the basis of direct labor hours. The master budget is as follows: Product A budget data Direct materials Direct labor (DL) Variable overhead Fixed overhead Total budgeted cost Product A production data Units produced: Materials purchased: Materials used: Direct labor: (40,000 feet x $14.00 per foot) (60,000 DL hours x $10.00 per hour) Fixed overhead incurred: (60,000 DL hours x $8.00 per hour) The following actual information is available for the production of Product A for the period: $720,000 $2,360,000 Variable overhead incurred: 9,500 39,500 feet @ $13.80 per foot 39,500 feet 56,000 hours, costing $560,000 $470,000 $560,000 $720,000 $600,000 $480,000 Required: Calculate the dollar amount and label the following variances as "favorable" or "unfavorable": Direct materials price variance Direct materials quantity variance Direct labor efficiency variance
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