Koontz Company manufactures a number of products. The standards relating to one of these products are...
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Koontz Company manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May. Direct materials: Standard: 1.80 feet at $1.20 per foot Actual: 1.75 feet at $1.60 per foot Direct labor: Standard: 0.90 hours at $16.00 per hour Actual: 0.95 hours at $15.40 per hour Variable overhead: Standard: 0.90 hours at $5.60 per hour Actual: 0.95 hours at $5.00 per hour Total cost per unit Excess of actual cost over standard cost per unit Standard Cost per Unit $ 2.16 1. Compute the following variances for May: a. Materials price and quantity variances. 14.40 b. Labor rate and efficiency variances. c. Variable overhead rate and efficiency variances. 5.04 $ 21.60 Actual Cost per Unit $ 2.80 14.63 $ 0.58 The production superintendent was pleased when he saw this report and commented: "This $0.58 excess cost is well within the 5 percent limit management has set for acceptable variances. It's obvious that there's not much to worry about with this product. 4.75 $ 22.18 Actual production for the month was 10,500 units. Variable overhead cost is assigned to products on the basis of direct labor-hours. There were no beginning or ending inventories of materials. Required: 2. How much of the $0.58 excess unit cost is traceable to each of the variances computed in requirement 1. 3. How much of the $0.58 excess unit cost is traceable to apparent inefficient use of labor time? Koontz Company manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May. Direct materials: Standard: 1.80 feet at $1.20 per foot Actual: 1.75 feet at $1.60 per foot Direct labor: Standard: 0.90 hours at $16.00 per hour Actual: 0.95 hours at $15.40 per hour Variable overhead: Standard: 0.90 hours at $5.60 per hour Actual: 0.95 hours at $5.00 per hour Total cost per unit Excess of actual cost over standard cost per unit Standard Cost per Unit $ 2.16 1. Compute the following variances for May: a. Materials price and quantity variances. 14.40 b. Labor rate and efficiency variances. c. Variable overhead rate and efficiency variances. 5.04 $ 21.60 Actual Cost per Unit $ 2.80 14.63 $ 0.58 The production superintendent was pleased when he saw this report and commented: "This $0.58 excess cost is well within the 5 percent limit management has set for acceptable variances. It's obvious that there's not much to worry about with this product. 4.75 $ 22.18 Actual production for the month was 10,500 units. Variable overhead cost is assigned to products on the basis of direct labor-hours. There were no beginning or ending inventories of materials. Required: 2. How much of the $0.58 excess unit cost is traceable to each of the variances computed in requirement 1. 3. How much of the $0.58 excess unit cost is traceable to apparent inefficient use of labor time? Koontz Company manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May. Direct materials: Standard: 1.80 feet at $1.20 per foot Actual: 1.75 feet at $1.60 per foot Direct labor: Standard: 0.90 hours at $16.00 per hour Actual: 0.95 hours at $15.40 per hour Variable overhead: Standard: 0.90 hours at $5.60 per hour Actual: 0.95 hours at $5.00 per hour Total cost per unit Excess of actual cost over standard cost per unit Standard Cost per Unit $ 2.16 1. Compute the following variances for May: a. Materials price and quantity variances. 14.40 b. Labor rate and efficiency variances. c. Variable overhead rate and efficiency variances. 5.04 $ 21.60 Actual Cost per Unit $ 2.80 14.63 $ 0.58 The production superintendent was pleased when he saw this report and commented: "This $0.58 excess cost is well within the 5 percent limit management has set for acceptable variances. It's obvious that there's not much to worry about with this product. 4.75 $ 22.18 Actual production for the month was 10,500 units. Variable overhead cost is assigned to products on the basis of direct labor-hours. There were no beginning or ending inventories of materials. Required: 2. How much of the $0.58 excess unit cost is traceable to each of the variances computed in requirement 1. 3. How much of the $0.58 excess unit cost is traceable to apparent inefficient use of labor time? Koontz Company manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May. Direct materials: Standard: 1.80 feet at $1.20 per foot Actual: 1.75 feet at $1.60 per foot Direct labor: Standard: 0.90 hours at $16.00 per hour Actual: 0.95 hours at $15.40 per hour Variable overhead: Standard: 0.90 hours at $5.60 per hour Actual: 0.95 hours at $5.00 per hour Total cost per unit Excess of actual cost over standard cost per unit Standard Cost per Unit $ 2.16 1. Compute the following variances for May: a. Materials price and quantity variances. 14.40 b. Labor rate and efficiency variances. c. Variable overhead rate and efficiency variances. 5.04 $ 21.60 Actual Cost per Unit $ 2.80 14.63 $ 0.58 The production superintendent was pleased when he saw this report and commented: "This $0.58 excess cost is well within the 5 percent limit management has set for acceptable variances. It's obvious that there's not much to worry about with this product. 4.75 $ 22.18 Actual production for the month was 10,500 units. Variable overhead cost is assigned to products on the basis of direct labor-hours. There were no beginning or ending inventories of materials. Required: 2. How much of the $0.58 excess unit cost is traceable to each of the variances computed in requirement 1. 3. How much of the $0.58 excess unit cost is traceable to apparent inefficient use of labor time?
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1 To calculate the average cost per unit for each productwe need to divide the total cost by the num... View the full answer
Related Book For
Managerial Accounting
ISBN: 978-0078111006
14th edition
Authors: Ray Garrison, Eric Noreen and Peter Brewer
Posted Date:
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