The Greco Company uses a flexible budget and standard costs to aid planning and control of...

  
 

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The Greco Company uses a flexible budget and standard costs to aid planning and control of its machining manufacturing operations. Its costing system for manufacturing has two direct-cost categories (direct materials and direct manufacturing labor-both variable) and two overhead-cost categories (variable manufacturing overhead and fixed manufacturing overhead, both allocated using direct manufacturing labor-hours). The following actual results are for August: 1(Click the icon to view the results.) Some additional information about Greco Company's budget, standard costs and labor follows: 2(Click the icon to view additional information.) Read the requirements³. Requirement 1. Compute the listed amounts for August. = Determine the formula, then complete the computation for each. (Abbreviations used: DM = Direct materials, mfg. : manufacturing, OH = Overhead.) a. Total pounds of direct materials purchased. DM price variance (based on purchases) + 184,800 + $ b. Total number of pounds of excess direct materials used. $ DM efficiency variance 759,000 $ Variable mfg. OH flexible-budget variance Standard cost per pound of DM 11.50 $ c. Variable manufacturing overhead spending variance. (Label the variance as favorable (F) or unfavorable (U).) Variable mfg. OH spending variance $ 8,100 F 10,800 Budgeted direct mfg. labor cost 750,000 + (1) Direct mfg. labor costs incurred 624750 DM price variance (per pound) 1.10 $ + Variable mfg. OH efficiency variance 18,900 $ $ d. Total number of actual direct manufacturing labor-hours used. Determine the formula, then complete the computation for each step below. Begin by computing the standard direct manufacturing labor rate. Now compute the total number of actual direct manufacturing labor-hours used. Budgeted direct mfg labor-hour level 30,000 = = (2) Actual direct mfg. labor rate Pounds of excess = direct materials used 66,000 = Pounds of DM purchased 168,000 = = Standard direct mfg labor rate 25.00 $ Actual direct mfg. labor-hours e. Total number of standard direct manufacturing labor-hours allowed for the units produced. Determine the formula, then complete the computation for each step below. Begin by computing the standard variable manufacturing overhead rate. Budgeted variable mfg. UH (3) Next, compute the number of excess hours. Variable mfg. Olt efficiency Varience. (5) Budgeted Direct nifg labor har level Standard variable (4) = mfg. OH rate Budgeted fixed mfg. OH (9) Now compute the total number of standard direct manufacturing labor-hours allowed for the units produced. Actual hours (7) + Standard Variable mify OH rate. (6) Excess has (8) = = Next, compute the fixed manufacturing overhead allocated. Budgeted fixed mifguirate. (11) f. Production-volume variance. Determine the formula, then complete the computation for each step below. Begin by computing the budgeted fixed manufacturing overhead rate. Pudgeted direct mfg labor-hour leve! (10) = = = Now compute the production-volume variance. (Label the variance as favorable (F) or unfavorable (U).) Budgeted fixed mfg OH Cost fixed nifg. OH allocated (13) (14) Excess hours Standard hrs allowed for units produced Standard hours Allowed for units produeixed mfg OH (12) allocated Budgeted fixed mfg. OH rate Production-volume variance Requirement 2. Describe how Greco's control of variable manufacturing overhead items differs from its control of fixed manufacturing overhead items. (15) the identification. of cost The control of variable manufacturing overhead requires (16) devers Individual variable manufacturing overhead items affected very much by day-to-day control. They are controlled are (17) Usually (18) daily by the number of units produced and the inputs used in production. Individual fixed manufacturing overhead items are (19) not usually affected very much by day-to-day control. They are controlled (20) periodically through planning decisions and budgetting procedures. 1: Data Table Direct materials price variance (based on purchases) Direct materials efficiency variance Direct manufacturing labor costs incurred Variable manufacturing overhead flexible-budget variance Variable manufacturing overhead efficiency variance Fixed manufacturing overhead incurred $184,800 F $759,000 U 624,750 10,800 U 18,900 U 467,500 2: More Info At the 30,000 budgeted direct manufacturing labor-hour level for August, budgeted direct manufacturing labor is $750,000, budgeted variable manufacturing overhead is $360,000, and budgeted fixed manufacturing overhead is $510,000. The standard cost per pound of direct materials is $11.50. The standard allowance is 6 pounds of direct materials for each unit of product. During August, 40,000 units of product were produced. There was no beginning inventory of direct materials. There was no beginning or ending work in process. In August, the direct materials price variance was $1.10 per pound. In July, labor unrest caused a major slowdown in the pace of production, resulting in an unfavorable direct manufacturing labor efficiency variance of $267,500. There was no direct manufacturing labor price variance. Labor unrest persisted into August. Some workers quit. Their replacements had to be hired at higher wage rates, which had to be extended to all workers. The actual average wage rate in August exceeded the standard average wage rate by $0.50 per hour. 3: Requirements 1. Compute the following for August: a. Total pounds of direct materials purchased b. Total number of pounds of excess direct materials used c. Variable manufacturing overhead spending variance d. Total number of actual direct manufacturing labor-hours used e. Total number of standard direct manufacturing labor-hours allowed for the units produced f. Production-volume variance 2. Describe how Greco's control of variable manufacturing overhead items differs from its control of fixed manufacturing overhead items. 4: listed amounts a. Total pounds of direct materials purchased b. Total number of pounds of excess direct materials used c. Variable manufacturing overhead spending variance d. Total number of actual direct manufacturing labor-hours used e. Total number of standard direct manufacturing labor-hours allowed for the units produced f. Production-volume variance The Greco Company uses a flexible budget and standard costs to aid planning and control of its machining manufacturing operations. Its costing system for manufacturing has two direct-cost categories (direct materials and direct manufacturing labor-both variable) and two overhead-cost categories (variable manufacturing overhead and fixed manufacturing overhead, both allocated using direct manufacturing labor-hours). The following actual results are for August: 1(Click the icon to view the results.) Some additional information about Greco Company's budget, standard costs and labor follows: 2(Click the icon to view additional information.) Read the requirements³. Requirement 1. Compute the listed amounts for August. = Determine the formula, then complete the computation for each. (Abbreviations used: DM = Direct materials, mfg. : manufacturing, OH = Overhead.) a. Total pounds of direct materials purchased. DM price variance (based on purchases) + 184,800 + $ b. Total number of pounds of excess direct materials used. $ DM efficiency variance 759,000 $ Variable mfg. OH flexible-budget variance Standard cost per pound of DM 11.50 $ c. Variable manufacturing overhead spending variance. (Label the variance as favorable (F) or unfavorable (U).) Variable mfg. OH spending variance $ 8,100 F 10,800 Budgeted direct mfg. labor cost 750,000 + (1) Direct mfg. labor costs incurred 624750 DM price variance (per pound) 1.10 $ + Variable mfg. OH efficiency variance 18,900 $ $ d. Total number of actual direct manufacturing labor-hours used. Determine the formula, then complete the computation for each step below. Begin by computing the standard direct manufacturing labor rate. Now compute the total number of actual direct manufacturing labor-hours used. Budgeted direct mfg labor-hour level 30,000 = = (2) Actual direct mfg. labor rate Pounds of excess = direct materials used 66,000 = Pounds of DM purchased 168,000 = = Standard direct mfg labor rate 25.00 $ Actual direct mfg. labor-hours e. Total number of standard direct manufacturing labor-hours allowed for the units produced. Determine the formula, then complete the computation for each step below. Begin by computing the standard variable manufacturing overhead rate. Budgeted variable mfg. UH (3) Next, compute the number of excess hours. Variable mfg. Olt efficiency Varience. (5) Budgeted Direct nifg labor har level Standard variable (4) = mfg. OH rate Budgeted fixed mfg. OH (9) Now compute the total number of standard direct manufacturing labor-hours allowed for the units produced. Actual hours (7) + Standard Variable mify OH rate. (6) Excess has (8) = = Next, compute the fixed manufacturing overhead allocated. Budgeted fixed mifguirate. (11) f. Production-volume variance. Determine the formula, then complete the computation for each step below. Begin by computing the budgeted fixed manufacturing overhead rate. Pudgeted direct mfg labor-hour leve! (10) = = = Now compute the production-volume variance. (Label the variance as favorable (F) or unfavorable (U).) Budgeted fixed mfg OH Cost fixed nifg. OH allocated (13) (14) Excess hours Standard hrs allowed for units produced Standard hours Allowed for units produeixed mfg OH (12) allocated Budgeted fixed mfg. OH rate Production-volume variance Requirement 2. Describe how Greco's control of variable manufacturing overhead items differs from its control of fixed manufacturing overhead items. (15) the identification. of cost The control of variable manufacturing overhead requires (16) devers Individual variable manufacturing overhead items affected very much by day-to-day control. They are controlled are (17) Usually (18) daily by the number of units produced and the inputs used in production. Individual fixed manufacturing overhead items are (19) not usually affected very much by day-to-day control. They are controlled (20) periodically through planning decisions and budgetting procedures. 1: Data Table Direct materials price variance (based on purchases) Direct materials efficiency variance Direct manufacturing labor costs incurred Variable manufacturing overhead flexible-budget variance Variable manufacturing overhead efficiency variance Fixed manufacturing overhead incurred $184,800 F $759,000 U 624,750 10,800 U 18,900 U 467,500 2: More Info At the 30,000 budgeted direct manufacturing labor-hour level for August, budgeted direct manufacturing labor is $750,000, budgeted variable manufacturing overhead is $360,000, and budgeted fixed manufacturing overhead is $510,000. The standard cost per pound of direct materials is $11.50. The standard allowance is 6 pounds of direct materials for each unit of product. During August, 40,000 units of product were produced. There was no beginning inventory of direct materials. There was no beginning or ending work in process. In August, the direct materials price variance was $1.10 per pound. In July, labor unrest caused a major slowdown in the pace of production, resulting in an unfavorable direct manufacturing labor efficiency variance of $267,500. There was no direct manufacturing labor price variance. Labor unrest persisted into August. Some workers quit. Their replacements had to be hired at higher wage rates, which had to be extended to all workers. The actual average wage rate in August exceeded the standard average wage rate by $0.50 per hour. 3: Requirements 1. Compute the following for August: a. Total pounds of direct materials purchased b. Total number of pounds of excess direct materials used c. Variable manufacturing overhead spending variance d. Total number of actual direct manufacturing labor-hours used e. Total number of standard direct manufacturing labor-hours allowed for the units produced f. Production-volume variance 2. Describe how Greco's control of variable manufacturing overhead items differs from its control of fixed manufacturing overhead items. 4: listed amounts a. Total pounds of direct materials purchased b. Total number of pounds of excess direct materials used c. Variable manufacturing overhead spending variance d. Total number of actual direct manufacturing labor-hours used e. Total number of standard direct manufacturing labor-hours allowed for the units produced f. Production-volume variance

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1 a Calculate total pounds of direct materials purchased as follows ... View the full answer