Rouse manufactures coffee mugs that it sells to other companies for customizing with their own logos. Rouse prepares flexible budgets and uses a standard cost system to control manufacturing costs. The standard unit cost of a coffee mug is based on static budge volume of 59,700 coffee mugs per month: Requirements1. Compute the cost and efficiency variances for direct materials and directlabor.2. Journalize the purchase and usage of direct materials and the assignment ofdirect labor, including the related variances.3.For manufacturing overhead, compute the variable overhead cost andefficiency variances and the fixed overhead cost and volume variances.4. Journalize the actual manufacturing overhead and the allocatedmanufacturing overhead. Journalize the movement of all production costsfrom Work-in-Process Inventory. Journalize the adjusting of the ManufacturingOverhead account.5. Rouse intentionally hired more highly skilled workers during July. How did thisdecision affect the cost variances? Overall, was the decision wise?PrintDone - X- XData TableMore InfoDirect Materials (0.2 Ibs @ $0.25 per Ib)2$0.05There were no beginning or ending inventory balances. All expenditures were onaccountActual production and sales were 62,400 coffee mugs.a.Direct Labor (3 minutes @ $0.12 per minute)0.36b.Manufacturing Overhead:Actual direct materials usage was 10,000 Ibs, at an actual cost of $0.17 per Ib.C.Variable (3 minutes @ $0.04 per minute)$ 0.12d. Actual direct labor usage was 203,000 minutes at a total cost of $28,420.0.390.51e. Actual overhead cost was $6,090 variable and $34,610 fixed.Fixed (3 minutes @ $0.13 per minute)f. Selling and administrative costs were $131,000.$ 0.92Total Cost per Coffee MugPrintDonePrintDone

Name: Rouse manufactures coffee mugs that it sells to other companies for cu
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Description: Rouse manufactures coffee mugs that it sells to other companies for customizing with their own logos. Rouse prepares flexible budgets and uses a standard cost system to control manufacturing costs. The standard unit cost of a coffee mug is based on s

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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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Rouse manufactures coffee mugs that it sells to other companies for customizing with their own logos. Rouse prepares flexible budgets and uses a standard cost system to control manufacturing costs. The standard unit cost of a coffee mug is based on static budge volume of 59,700 coffee mugs per month:

Requirements
1. Compute the cost and efficiency variances for direct materials and direct
labor.
2. Journalize the purchase and usage of direct materials and the assignment of
direct labor, including the related variances.
3.
For manufacturing overhead, compute the variable overhead cost and
efficiency variances and the fixed overhead cost and volume variances.
4. Journalize the actual manufacturing overhead and the allocated
manufacturing overhead. Journalize the movement of all production costs
from Work-in-Process Inventory. Journalize the adjusting of the Manufacturing
Overhead account.
5. Rouse intentionally hired more highly skilled workers during July. How did this
decision affect the cost variances? Overall, was the decision wise?
Print
Done

- X
- X
Data Table
More Info
Direct Materials (0.2 Ibs @ $0.25 per Ib)
2$
0.05
There were no beginning or ending inventory balances. All expenditures were on
account
Actual production and sales were 62,400 coffee mugs.
a.
Direct Labor (3 minutes @ $0.12 per minute)
0.36
b.
Manufacturing Overhead:
Actual direct materials usage was 10,000 Ibs, at an actual cost of $0.17 per Ib.
C.
Variable (3 minutes @ $0.04 per minute)
$ 0.12
d. Actual direct labor usage was 203,000 minutes at a total cost of $28,420.
0.39
0.51
e. Actual overhead cost was $6,090 variable and $34,610 fixed.
Fixed (3 minutes @ $0.13 per minute)
f. Selling and administrative costs were $131,000.
$ 0.92
Total Cost per Coffee Mug
Print
Done
Print
Done

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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