Rog Corporation makes a product with the following standard costs: Standard input/ output ratio Standard Price per
Question:
Rog Corporation makes a product with the following standard costs: Standard input/ output ratio Standard Price per Unit of Input Direct materials 7 grams$6.00 per grab direct labor 2 hours$16.00 per hour Variable manufacturing overhead 2 hours$6.00 per hour The monthly budgeted fixed manufacturing overhead is $432,000. Budgeted monthly output is 10,800 units.The company reported the following results concerning this product in June. Actual output 11, 000 units Direct materials used in production 78,400 grams Purchases of direct materials 88,200 grams actual direct labor-hours 20,000 hours actual cost of direct materials purchases $520,380 Actual direct labor cost$324,000 Actual variable overhead cost$140,000 Actual fixed overhead cost$412,000 The company allocates manufacturing overhead based on direct lobar-hours.
Required
a.Use a table to calculate direct materials price variance and efficiency variance, labor rate variance and efficiency variance, variable overhead spending varianceand efficiency variance, and fixed overhead spending variance and production volume variance. Indicate whether each variance is favorable or unfavorable(16%)
b.What are the possible causes of a favorable direct materials price variance? Provide three causes and explain. (6%)
c.What are the possible causes of an unfavorable direct labor efficiency variance? Provide three causes and explain. (6%)
Managerial Accounting
ISBN: 978-0697789938
13th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer