Question

Ingles Company manufactures external hard drives. At the beginning of the period, the following plans for production and costs were revealed:
Units to be produced and sold ............ 25,000
Standard cost per unit:
Direct materials................... $ 10
Direct labor................... 8
Variable overhead................. 4
Fixed overhead.................. 3
Total unit cost .................. $ 25
During the year, 24,800 units were produced and sold. The following actual costs were incurred:
Direct materials.......... $264,368
Direct labor............ 204,352
Variable overhead.......... 107,310
Fixed overhead........... 73,904
There were no beginning or ending inventories of direct materials. The direct materials price
variance was $10,168 unfavorable. In producing the 24,800 units, a total of 12,772 hours were worked, 3 percent more hours than the standard allowed for the actual output. Overhead costs are applied to production using direct labor hours.
Required:
1. Prepare a performance report comparing expected costs to actual costs.
2. Determine the following:
a. Direct materials usage variance
b. Direct labor rate variance
c. Direct labor usage variance
d. Fixed overhead spending and volume variances
e. Variable overhead spending and efficiency variances
3. Use T-accounts to show the flow of costs through the system. In showing the flow, you do not need to show detailed overhead variances. Show only the over
and underapplied variances for fixed and variable overhead.


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  • CreatedSeptember 01, 2015
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