Wiarton Wood Products Ltd. is planning to produce 150,000 metal widgets for the coming year. Each unit requires 2 standard hours of direct labour for completion at a standard direct labour rate of $14.00 per hour, and a standard of 2.25 grams of direct material at a standard cost of $5 per gram. The company uses direct labour hours to assign overhead to products. The total overhead budgeted for the coming year is $1,200,000, and the standard fixed overhead rate is $3.50 per unit produced. Actual results for the year were: Production (units) Actual direct labour hours Beginning direct materials inventory (units) Ending direct materials inventory (units) Direct materials purchases (units) Cost of direct materials purchases Direct labour cost Actual variable overhead Actual fixed overhead Required: 142,000 270,000 15,000 16,400 600,000 $2,900,000 $4,100,000 $621,000 $ 490,000 1. Compute the variable overhead spending and efficiency variances. Label as favourable or unfavourable. Spending variance Unfavourable ✓ Efficiency variance 2. Compute the fixed overhead spending and volume variances. Label as favourable or unfavourable. Spending variances Volume variances

Wiarton Wood Products Ltd. is planning to produce 150,000 metal widgets for the coming year. Each unit requires 2 standard hours of direct labour for completion at a standard direct labour rate of $14.00 per hour, and a standard of 2.25 grams of direct material at a standard cost of $5 per gram. The company uses direct labour hours to assign overhead to products. The total overhead budgeted for the coming year is $1,200,000, and the standard fixed overhead rate is $3.50 per unit produced. Actual results for the year were: Production (units) Actual direct labour hours Beginning direct materials inventory (units) Ending direct materials inventory (units) Direct materials purchases (units) Cost of direct materials purchases Direct labour cost Actual variable overhead Actual fixed overhead Required: 142,000 270,000 15,000 16,400 600,000 $2,900,000 $4,100,000 $621,000 $ 490,000 1. Compute the variable overhead spending and efficiency variances. Label as favourable or unfavourable. Spending variance Unfavourable ✓ Efficiency variance 2. Compute the fixed overhead spending and volume variances. Label as favourable or unfavourable. Spending variances Volume variances

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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