Zippy Inc. manufactures a fuel additive, Surge, which has a stable selling price of $44 per drum.

Question:

Zippy Inc. manufactures a fuel additive, Surge, which has a stable selling price of $44 per drum. The company has been producing and selling 80,000 drums per month. In connection with your examination of Zippy's financial statements for the year ended September 30, management has asked you to review some computations made by Zippy's cost accountant. Your working papers disclose the following about the company's operations: Standard costs per drum of product manufactured:

Zippy Inc. manufactures a fuel additive, Surge, which has a


Costs and expenses during September:
Chemicals: 645,000 gallons purchased at a cost of $1,140,000; 600,000 gallons used.
Empty drums: 94,000 purchased at a cost of $94,000; 80,000 drums used.
Direct labor: 81,000 hours worked at a cost of $654,480. Factory overhead: $768,000.

Required:
Calculate the following variances for September, using the formulas on pages 402 and 403:
1. Materials quantity variance.
2. Materials purchase price variance.
3. Labor efficiency variance.
4. Labor ratevariance.

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Principles of Cost Accounting

ISBN: 978-1133187868

16th edition

Authors: Edward J. Vanderbeck

Question Posted: