Wisner Fabrication prepares its budgets on the basis of standard costs. Variances are analyzed and reported monthly. There are no materials inventories. The following information relates to the current period: Standard costs (per unit of output) Direct materials, 5 pounds @ $12.00 per pound Direct labor, 1.5 hours @ $30 per hour Factory overhead Variable (30% of material cost) Total standard cost per unit Actual costs and activities for the month follow: Materials used Output Actual labor costs Actual variable overhead 26,300 5,500 8,940 $ 95,790 $60 units 45 18 $123 pounds at $ 12.40 per pound hours at $ 32 per hour Required: Prepare a cost variance analysis for the variable costs. Note: 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.
Wisner Fabrication prepares its budgets on the basis of standard costs. Variances are analyzed and reported monthly. There are no materials inventories. The following information relates to the current period: Standard costs (per unit of output) Direct materials, 5 pounds @ $12.00 per pound Direct labor, 1.5 hours @ $30 per hour Factory overhead Variable (30% of material cost) Total standard cost per unit Actual costs and activities for the month follow: Materials used Output Actual labor costs Actual variable overhead 26,300 5,500 8,940 $ 95,790 $60 units 45 18 $123 pounds at $ 12.40 per pound hours at $ 32 per hour Required: Prepare a cost variance analysis for the variable costs. Note: 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.
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter8: Standard Cost Accounting—materials, Labor, And Factory Overhead
Section: Chapter Questions
Problem 21E: Georgia Gasket Co. budgets 8,000 direct labor hours for the year. The total overhead budget is...
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:Wisner Fabrication prepares its budgets on the basis of standard costs. Variances are analyzed and reported monthly. There are no
materials inventories.
The following information relates to the current period:
Standard costs (per unit of output)
Direct materials, 5 pounds @ $12.00 per pound
Direct labor, 1.5 hours @ $30 per hour
Factory overhead
Variable (30% of material cost)
Total standard cost per unit
Actual costs and activities for the month follow:
Materials used
Output
Actual labor costs
Actual variable overhead
26,300
5,500
8,940
$ 95,790
$ 60
units
45
18
$ 123
pounds at $ 12.40 per pound
hours at $ 32 per hour
Required:
Prepare a cost variance analysis for the variable costs.
Note: 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.
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