24 Question 4 A company makes e product called goop for home use. The standard cost card for one case (10 containers) of goop is: Raw materials (2 litres @S4) $ 8.00 Containers (10 @ $0.10) 1.00 Direct labour (0.5 hour $8) 4.00 Variable overhead (0.5 hours 52) 1.00 Fixed overhead (0.5 hours @ $4) 2.00 $16.00 Overhead standards are computed as follows: Y-$16,000 + 52 x direct labour-bours. Inventory, production, and sales data for the period are as follows: Opening Inventories Ending Inventories Issued to Production Raw materials 1,000 litres 7,400 litres 13,600 litres Finished goods 400 cases 200 cases Containers 0 62,000 Work in process 0 Production 6,000 cases Sales 6,200 cases @ 24/cases Direct Inbour lised 2,800 hours @ $8.10/hour Actual variable overhead cost $6,500 Actual fixed overhead cost $18,000 Selling and administration $38,000 ($30,000 fixed) Raw materials actual cost $3.80 per litre Container actual cost S0.09 6 Required 8. Calculate the direct cost varlances (price and efficiency variances for uw materials, containers, and direct labour) 6 b. Calculate the variable overhead variances. 6 c. Calculate the fixed overhead variances, 6 d. Prepare journal entries to account for the following, assuming that standard casting is used: n Raw materials Finished goods Containers Work in process 13,600 litres 1,000 litres 400 cases 0 0 7,400 litres 200 cases 62,000 0 6 Preduction 6,000 cases Sales 6,200 cases @ 24/cases Direct labour used 2,800 hours $8.10/hour Actul variable overhead cost $6,500 Actual fixed overhead cost $18,000 Selling and administration $38,000 ($30,000 fixed) Raw materials actual cost $3.80 per litre Container actual cost $0.09 Required a. Calculate the direct cost variances (price and efficiency variances for raw materials, containers, and direct labour) b. Calculate the variable overhead variances. 6 Cateutate the fixed overhead variances. d. Prepare journal entries to account for the following, assuming that standard costing is used: D) Purchase of containers, including the price variance. i) Application of raw materials to work in process, including the efficiency variance. 1) Incurrence of variable overhead, application of variable overhead to work in process, and the isolation of the variable overhed variances. Assume that the actual cost is credited to accounts payable iv) Completion of production and transfer to finished goods inventory at standard cost 6 6 6 Continued