Question 1: The entry pertaining to the volume variance if the standard direct labor hoursallowed for this month was 24,000 will include a debit/(credit) to manufacturing overeheadamounting to? (USE NEGATIVE SIGN IF CREDIT)Question 2: How much is the variable spending variance if 17,500 units were produced?Question 3: If 13,000 units were produced during the month. How much overhead costs weredebited to the Work-in-Process Inventory? Saktanmokobaybeh Company uses standard costing for direct materials and direct labor. Thefollowing monthly cost functions were developed for manufacturing overhead items:Budgeted Overhead Item Cost Function:Indirect materialsP 1.00 per DLHIndirect labor1.25 per DLHUtilities0.50 per DLHInsurance50,000Depreciation400,000The cost functions were determined using observations from 20,000 to 30,000 direct laborhours. The company expects to operate at 25,000 direct labor hours per month. Thetheoretical capacity per month of the company is 30,000 units. Each unit requires 2 directlabor hours. The Company applies overhead using direct labor hours.Actual data for this month are as follows:Variable overhead costs P 87,000Fixed overhead costs423,000Direct labor hours26,000P

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Description: Question 1: The entry pertaining to the volume variance if the standard direct labor hoursallowed for this month was 24,000 will include a debit/(credit) to manufacturing overeheadamounting to? (USE NEGATIVE SIGN IF CREDIT)Question 2: How much is th

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y pertaining to the volume variance if the standard direct la th was 24,000 will include a debit/(credit) to manufacturing NEGATIVE SIGN IF CREDIT) uch is the variable spending variance if 17,500 units were pr

y pertaining to the volume variance if the standard direct la th was 24,000 will include a debit/(credit) to manufacturing NEGATIVE SIGN IF CREDIT) uch is the variable spending variance if 17,500 units were pr

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

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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Question

Saktanmokobaybeh Company uses standard costing for direct materials and direct labor. The
following monthly cost functions were developed for manufacturing overhead items:
Budgeted Overhead Item Cost Function:
Indirect materials
P 1.00 per DLH
Indirect labor
1.25 per DLH
Utilities
0.50 per DLH
Insurance
50,000
Depreciation
400,000
The cost functions were determined using observations from 20,000 to 30,000 direct labor
hours. The company expects to operate at 25,000 direct labor hours per month. The
theoretical capacity per month of the company is 30,000 units. Each unit requires 2 direct
labor hours. The Company applies overhead using direct labor hours.
Actual data for this month are as follows:
Variable overhead costs P 87,000
Fixed overhead costs
423,000
Direct labor hours
26,000
P

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Antuan Company set the following standard costs per unit for its product. Direct materials (6 pounds @ $5 per pound) $ 30 Direct labor (2 hours @ $17 per hour) 34 Overhead (2 hours @ $18.50 per hour) 37 Standard cost per unit $ 101 The standard overhead rate ($18.50 per direct labor hour) is based on a predicted activity level of 75% of the factory's capacity of 20,000 units per month. Following are the company's budgeted overhead costs per month at the 75% capacity level. Overhead Budget (75% Capacity) Variable overhead costs $ 45,000 Indirect materials Indirect labor 180,000 Power 45,000 Maintenance 90,000 costs 360,000 Total var ble ove Fixed overhead costs. 24,000 80,000 Depreciation-Building Depreciation-Machinery Taxes and insurance Supervisory salaries. 12,000 79,000 Total fixed overhead costs 195,000 Total overhead costs $ 555,000 The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (91,000 pounds @ $5.10 per pound) $…
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