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. Standard Cost per Unit Direct materials: Standard: 1.90 feet at $4.00 per foot Actual: 1.85 feet at $4.40 per foot Direct labor: Standard: 1.10 hour at $16.00 per hour Actual: 1.15 hour at $15.40 per hour Variable overhead: Standard: 1.10 hour at $9.00 per hour Actual: 1.15 hour at $8.60 per hour Total cost per unit $ 7.60 17.60 9.90 Excess of actual cost over standard cost per unit Actual Cost per Unit $ 8.14 17.71 9.89 $ 35.10 $ 35.74 $ 0.64 The production superintendent was pleased when he saw this report and commented: "This $0.64 excess cost is well within the 4 percent limit management has set for acceptable variances. It's obvious there's not much to worry about with this product." Actual production for the month was 17,500 units. Variable overhead cost is assigned to products based on direct labor-hours. There were no beginning or ending inventories of materials. Required: 1. Compute the following variances for May: a. Materials price and quantity variances. b. Labor rate and efficiency variances. c. Variable overhead rate and efficiency variances. 2. How much of the $0.64 excess unit cost is traceable to each of the variances computed in requirement 1. 3. How much of the $0.64 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. Standard Cost per Unit Direct materials: Standard: 1.90 feet at $4.00 per foot Actual: 1.85 feet at $4.40 per foot Direct labor: Standard: 1.10 hour at $16.00 per hour Actual: 1.15 hour at $15.40 per hour Variable overhead: Standard: 1.10 hour at $9.00 per hour Actual: 1.15 hour at $8.60 per hour Total cost per unit $ 7.60 17.60 9.90 Excess of actual cost over standard cost per unit Actual Cost per Unit $ 8.14 17.71 9.89 $ 35.10 $ 35.74 $ 0.64 The production superintendent was pleased when he saw this report and commented: "This $0.64 excess cost is well within the 4 percent limit management has set for acceptable variances. It's obvious there's not much to worry about with this product." Actual production for the month was 17,500 units. Variable overhead cost is assigned to products based on direct labor-hours. There were no beginning or ending inventories of materials. Required: 1. Compute the following variances for May: a. Materials price and quantity variances. b. Labor rate and efficiency variances. c. Variable overhead rate and efficiency variances. 2. How much of the $0.64 excess unit cost is traceable to each of the variances computed in requirement 1. 3. How much of the $0.64 excess unit cost is traceable to apparent inefficient use of labor time?
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1 Materials Variances Actual cost per unit for materials 760 Standard cost per unit for materials 81... 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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