Beal Manufacturing Company s costing system has two direct cost categories
Beal Manufacturing Company's costing system has two direct cost categories: direct materials and direct manufac turing labour. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of standard direct manufacturing labour-hours (DMLH). At the beginning of 2013, Beal adopted the following standards for its manufacturing costs:
The denominator level for total manufacturing overhead per month in 2013 is 40,000 DMLH. Beal’s flexible budget for January 2013 was based on this denominator level. The records for January indicate the following:
Direct materials purchased ...............25,000 kg at $5.20/kg
Direct materials used...................23,100 kg
Direct manufacturing labour..............40,100 hours at $14.60/hour
Total actual manufacturing overhead (variable and fixed)..$600,000
Actual production....................7,800 output units
1. Prepare a schedule of total standard manufacturing costs for the 7,800 output units in January 2013.
2. For January 2013, compute the following variances, indicating whether each is favourable (F) or unfavourable (U):
a. Direct materials price variance, based on purchases.
b. Direct materials efficiency variance.
c. Direct manufacturing labour price variance.
d. Direct manufacturing labour efficiency variance.
e. Total manufacturing overhead rate variance.
f. Variable manufacturing overhead efficiency variance.
g. Production-volume variance
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