The Beal Manufacturing Companys costing system has two direct-cost categories: direct materials and direct manufacturing labor. Manufacturing
Question:
The Beal Manufacturing Company’s costing system has two direct-cost categories: direct materials and direct manufacturing labor. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of standard direct manufacturing labor-hours (DMLH). At the beginning of 2020, Beal adopted the following standards for its manufacturing costs:
The denominator level for total manufacturing overhead per month in 2020 is 37,000 direct manufacturing labor-hours. Beal’s budget for January 2020 was based on this denominator level. The records for January indicated the following:
Required
1. Prepare a schedule of total standard manufacturing costs for the 7,600 output units in January 2020.
2. For the month of January 2020, compute the following variances, indicating whether each is favorable (F) or unfavorable (U):
a. Direct materials price variance, based on purchases
b. Direct materials efficiency variance
c. Direct manufacturing labor price variance
d. Direct manufacturing labor efficiency variance
e. Total manufacturing overhead spending variance
f. Variable manufacturing overhead efficiency variance
g. Production-volume variance
Step by Step Answer:
Horngrens Cost Accounting A Managerial Emphasis
ISBN: 9780135628478
17th Edition
Authors: Srikant M. Datar, Madhav V. Rajan