budgeting task

Project Description:

project description: 1. given the following data for lxg corporation:

standard direct materials per unit 4 oz.
standard direct labor hours per unit 1.5 hours
standard direct materials price $5 per oz.
standard direct labor rate $6 per hour
production (in finished or equivalent units) 2,000 units
actual direct labor hours 2,200 hrs
actual direct labor cost $23,490
actual direct materials used 7,800 oz.
units sold 1,400 units
direct materials purchased 8,000 oz.
cost of direct materials purchased $34,000

a. calculate the direct material and direct labor price and efficiency variances.
b. suggest two possible causes for the largest variance in part (a). for each cause you identify, describe an appropriate action (if any) that managers should take.
c. describe two general factors that managers should consider in deciding whether to investigate the variances in part (a).

2. the accountants at value vases developed the following standards for producing exquisite vases from a liquid silicate:

direct materials 2.5 gallons @ $5 per gallon
direct labor 3.5 hours @ $15 per hour
variable overhead $10.00 per direct labor hour
fixed overhead $5.00 per direct labor hour

value’s volume of direct labor hours for normal costing is 1,680 each month. in a recent month, value produced 500 vases and incurred the following costs:

direct materials purchased & used 1,200 gallons @ $6 per gallon
direct labor 1,700 hours @ $14 per hour
variable overhead $15,000
fixed overhead $8,500

a. calculate the following eight variances.
i. direct material price variance
ii. direct material efficiency variance
iii. direct labor price variance
iv. direct labor efficiency variance
v. variable overhead spending variance
vi. variable overhead efficiency variance
vii. fixed overhead spending variance
viii. fixed overhead production volume variance
b. suggest one possible cause for each of the following variances calculated in part (a):
i. direct material price variance
ii. direct labor efficiency variance
iii. fixed overhead spending variance
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Price Type: Negotiable

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