Question

Assume that Timekiller, Inc., manufactures a new electronic game console. The current standard costs sheet for a game console follows:
Direct materials, ? kilograms at $4 per kilogram . . . . $ ? per game
Direct labor, 0.25 hours at ? per hour . . . . . . . . . . . . ? per game
Overhead, 0.25 hours at ? per hour. . . . . . . . . . . . . . ? per game
Total costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $13 per game
Assume that the following data appeared in Timekiller's records at the end of the past month:
Actual production . . . . . . . . . . . . . . . . . . . . . . . . . 24,000 units
Actual sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000 units
Materials (37,500 kilograms) . . . . . . . . . . . . . . . . $157,500
Materials price variance . . . . . . . . . . . . . . . . . . . . 7,500 U
Materials efficiency variance . . . . . . . . . . . . . . . . 6,000 U
Direct labor price variance . . . . . . . . . . . . . . . . . . 4,560 U
Direct labor (5,700 hours) . . . . . . . . . . . . . . . . . . . 95,760
Underapplied overhead (total). . . . . . . . . . . . . . . . 3,000 U

There are no materials inventories.

Required
a. Prepare a variance analysis for direct materials and direct labor and complete the standard cost sheet.
b. Assume that all production overhead is fixed and that the $3,000 underapplied is the only overhead variance that can be computed. What are the actual and applied overhead amounts?
(CPA adapted)



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  • CreatedDecember 18, 2013
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