Rutherford Wheel and Axle, Inc. has an automate production process, and production activity is quantified in terms of process hours. A standard-costing system is used.
Rutherford Wheel and Axle, Inc. has an automate production process, and production activity is quantified in terms of process hours. A standard-costing system is used. The annual static budget for 20x1 called for 6,000 units to be produced, requiring 30,000 machine hours. The standard overhead rate for the year was computed using this planned level of production. The 20x1 manufacturing cost reports follows.
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Rutherford develops flexible budgets for different levels of activity for use in evaluating performance. A total of 6,200 units were produced during 20x 1, requiring 32,000 machine hours. The preceding manufacturing cost report compares the company’s actual cost for the year with the static budget and the flexible budget for two different activity levels.
Required:
Compute the following amounts. For variances, indicate whether favorable or unfavorable where appropriate. Answers should be rounded to two decimal places when necessary
1. The standard number of machine hours allowed producing one unit of product.
2. The actual cost of direct material used in one unit of product.
3. The cost of material that should be processed per machine hour,
4. The standard direct-labor cost for each unit produced.
5. The variable-overhead rate per machine hour in a flexible-budget formula.
6. The standard fixed-overhead rate per machine hour used for product costing.
7. The variable-overhead spending variance. (Assume management has determined that the actual fixed overhead cost in 20x 1 amounted to $324,000.)
8. The variable-overhead efficiency variance.
9. The fixed-overhead budget variance.
10. The fixed-overhead volume variance.
11. The total budgeted manufacturing cost (in thousands of dollars) for an output of 6,050 units.
RUTHERFORD WHEEL AND AXLE, INC Manufacturing Cost Report For 20x1 (in thousands of dollars) Static Budget Flexible Budget 32,000 30,000 Machine Hours 31,000 Machine Hours MachineActual Cost Hours Cost Item Direct material: 268.8 270.0 G27 aluminum M14 steel alloy 78.0 80.6 83.2 83.0 Direct labor: 291.2 249.6 250.0 287.0 Assembler . Grinder.... 273.0 234.0 282.1 241.8 Manufacturing overhead: 4.0 129.0 80.0 144.0 50.0 200.0 $1.464.0 248 133.3 82.0 147.0 0.0 200.0 $1,502.0 25.0 130.0 81.0 147.0 50.0 200.0 Maintenance Supplies Supervision .. Inspectionmanun Insurance 137.6 84.0 150.0 50.0 200.0 Depreciation. $1,5400 $1,523.0 Total cost
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1 Standard machine hours per unit 5 hours per unit 2 Actual cost of direct material per unit 5694 per unit rounded 3 Standard directmaterial cost per ... View full answer

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