Cedar Inc. specializes in the production of futons. It uses standard costing and flexible budgets to account

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Cedar Inc. specializes in the production of futons. It uses standard costing and flexible budgets to account for the production of a new line of futons. For 2015, budgeted variable overhead at a level of 3,200 standard monthly direct labour-hours was $25,600; budgeted total overhead at 4,000 standard monthly direct labour-hours was $79,040. The standard cost allocated to each output included a total overhead rate of 120% of standard direct labour costs. For October, Cedar Inc. incurred total overhead of $99,600 and direct labour costs of $80,976. The direct labour rate variance was $3,856 unfavourable. The direct labour flexible-budget variance was $5,776 unfavourable. The standard labour rate was $16 per hour. The production-volume variance was $5,600, favourable.
Required
1. Calculate the direct labour efficiency variance, and the rate and efficiency variances for overhead. Also, calculate the denominator level.
2. Describe how individual variable overhead items are controlled from day to day. Also, describe how individual fixed overhead items are controlled.
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Cost Accounting A Managerial Emphasis

ISBN: 978-0133138443

7th Canadian Edition

Authors: Srikant M. Datar, Madhav V. Rajan, Charles T. Horngren, Louis Beaubien, Chris Graham

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