Question

Ice Box Gourmet, Inc., produces containers of frozen food. During April, The Company produced 725 cases of food and incurred the following actual costs.
Variable overhead....................................................................... $ 5,500
Fixed overhead............................................................................ 13,000
Actual labor cost (4,000 direct-labor hours)................................ 75,600
Actual material cost (15,000 pounds purchased and used)......... 33,000

Overhead is budgeted and applied using direct-labor hours. Standard cost and annual budget information are as follows:
Standard Costs per Case
Direct labor (5 hours at $18)............................................ $ 90.00
Direct material (20 pounds at $2).................................... 40.00
Variable overhead (5 hours at $1.50).............................. 7.50
Fixed overhead (5 hours at $3)........................................ 15.00
Total................................................................................. $152.50
Annual Budget Information
Variable overhead............................................................ $ 75,000
Fixed overhead................................................................. $150,000
Planned activity for year.................................................. 50,000 direct-labor hours

Required:
1. Prepare as complete an analysis of cost variances as is possible from the available data.
2. Build a spreadsheet: Construct an Excel spreadsheet to solve the preceding requirement. Show how the solution will change if the following information changes: the standard rates were $17.50 per hour for direct labor, and $1.60 per direct-labor hour for variable overhead.



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  • CreatedApril 22, 2014
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