Colonial Furniture Co. uses a standard cost system. One of the company's most popular products is...

 

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Colonial Furniture Co. uses a standard cost system. One of the company's most popular products is a cherry wood desk. The per-unit standard costs of the desk, assuming a "normal" volume of 2,000 units per month, are as follows: Direct materials, 100 board-feet of wood at RM1.50 per foot Direct labour, 4 hours at RM10.00 per hour RM RM 150.00 Manufacturing overhead (applied at RM18 per unit) Fixed (RM20,000 2,000 units of normal 10.00 production) Variable Total standard unit cost 40.00 8.00 18.00 208.00 During May, 1,800 desks were scheduled and produced at the following actual unit costs: Direct materials, 105 feet at RM1.40 per foot Direct labour, 4.5 hours at RM9.00 per hour Manufacturing overhead, RM34,200+ 1,800 units Total actual unit cost Required: RM 147.00 40.50 19.00 206.50 a) Evaluate the performance of the company in terms of materials price and quantity variances, the labor rate and efficiency variances, and the overhead spending and volume variances for the month. b) Evaluate the possible reasons behind each of the variances. Colonial Furniture Co. uses a standard cost system. One of the company's most popular products is a cherry wood desk. The per-unit standard costs of the desk, assuming a "normal" volume of 2,000 units per month, are as follows: Direct materials, 100 board-feet of wood at RM1.50 per foot Direct labour, 4 hours at RM10.00 per hour RM RM 150.00 Manufacturing overhead (applied at RM18 per unit) Fixed (RM20,000 2,000 units of normal 10.00 production) Variable Total standard unit cost 40.00 8.00 18.00 208.00 During May, 1,800 desks were scheduled and produced at the following actual unit costs: Direct materials, 105 feet at RM1.40 per foot Direct labour, 4.5 hours at RM9.00 per hour Manufacturing overhead, RM34,200+ 1,800 units Total actual unit cost Required: RM 147.00 40.50 19.00 206.50 a) Evaluate the performance of the company in terms of materials price and quantity variances, the labor rate and efficiency variances, and the overhead spending and volume variances for the month. b) Evaluate the possible reasons behind each of the variances.

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a Performance Evaluation of Colonial Furniture Co Variances Direct Materials Price Variance Favorable Standard price per foot RM150 Actual price per f... View the full answer