- Data Table 0.05 0.39 Direct Materials (0.2 lbs @ $0.25 per lb) Direct Labor (3 minutes @ $0.13 per minute) Manufacturing Overhead: Variable (3 minutes @ $0.04 per minute) $ 0.12 Fixed (3 minutes @ $0.14 per minute) 0.42 0.54 0.98 Total Cost per Coffee Mug More Info a. There were no beginning or ending inventory balances. All expenditures were on account. b. Actual production and sales were 62,900 coffee mugs. c. Actual direct materials usage was 10,000 lbs. at an actual cost of $0.17 per lb. d. Actual direct labor usage was 202,000 minutes at a total cost of $30,300. e. Actual overhead cost was $7,070 variable and $33,830 fixed. f. Selling and administrative costs were $123,000. Cole manufactures coffee mugs that it sells to other companies for customizing with their own logos. Cole prepares flexible budgets and uses a standard cost system to control manufacturing costs. The standard unit cost of a coffee mug is based on stalic budget volume of 60,200 coffee mugs per month: (Click the icon to view the cost data. Actual cost and production information for July 2024 follows: Click the icon to view actual cost and production Information.) Read the requirements. Requirement 1. Compute the cost and efficiency variances for direct materials and direct labor. Begin with the cost variances. Select the required formulas, compute the cost variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U). (Abbreviations used: AC = actual cost; AQ = actual quantity: FOH = fixed overhead; SC = standard cost; SQ = standard quantity.) Formula Variance Direct materials cost variance = Direct labor cost variance = Select the required formulas, compute the efficiency variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U). (Abbreviations used: AC = actual cost; AQ = actual quantity: FOH = fixed overhead; SC = standard cost; SQ = standard quantity.) Formula Variance Direct materials efficiency variance Direct labor efficiency variance Requirement 2. Journalize the purchase and usage of direct materials and the assignment of direct labor, including the related variances. (Record debits first, then credits. Select the explanation on the last line of the joumal entry table.) Begin by journalizing the purchase of direct materials, including the related variance. (Prepare a single compound journal entry) Date Accounts and Explanation Debit Credit Jul Cole manufactures coffee mugs that it sells to other companies for customizing with their own logos. Cole prepares flexible budgets and uses a standard cost system to control manufacturing costs. The standard unit cost of a coffee mug is based on static budget volume of 60,200 coffee mugs per month: |(Click the icon to view the cost data.) Actual cost and production information for July 2024 follows: (Click the icon to view actual cost and production information.) Read the requirements. Now, journalize the usage of direct materials, including the related variance. (Prepare a single compound journal entry.) Date Accounts and Explanation Debit Credit Jul. Journalize the incurrance and assignment of direct labor costs, including the related variances. (Prepare a single compound journal entry.) Date Accounts and Explanation Debit Credit Jul. Cole manufactures coffee mugs that it sells to other companies for customizing with their own logos. Cole prepares flexible budgets and uses a standard cost systern to control manufacturing costs. The standard unit cost of a coffee mug is based on static budget volume of 60,200 coffee mugs per month: (Click the icon to view the cost data.) Actual cost and production information for July 2024 follows: Click the icon to view actual cost and production information.) Read the requirements Requirement 3. For manufacturing overhead, compute the variable overhead cost and efficiency variances and the fixed overhead cost and volume varlances. Begin with the variable overhead cost and efficiency variances. Select the required formulas, compute the variable overhead cost and efficiency variances, and identify whether each variance is favorable (F) or unfavorable (U). (Round any interim calculations to four decimal places, X.XXXX, and your final answers to the nearest whole dollar. Abbreviations used: AC = actual cost; AQ = actual quantity: FOH = fixed overhead; SC = standard cost: SQ = standard quantity; VOH = variable overhead.) Formula Variance VOH cost variance VOH efficiency variance Now compute the fixed overhead cost and volume variances. Select the required formulas, compute the fixed overhead cost and volume variances, and identify whether each variance is favorable (F) or unfavorable (U). (Abbreviations used: AC = actual cost; AQ = actual quantity; FOH = fixed overhead; SC = standard cost: SQ = standard quantity.) Formula Variance FOH cost variance FOH volumno variance = Requirement 4. Journalize the actual manufacturing overhead and the allocated manufacturing overhead. Journalize the movement of all production costs from Work-in-Process Inventory. Journalize the adjusting of the Manufacturing Overhead account. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Begin by journalizing the entry to show the actual manufacturing overhead costs incurred. Date Accounts and Explanation Debit Credit Jul. Cole manufactures coffee mugs that it sells to other companies for customizing with their own logos. Cole prepares flexible budgets and uses a standard cost system to control manufacturing costs. The standard unit cost of a coffee mug is based on static budget volume of 60,200 coffee mugs per month: (Click the icon to view the cost data.) Actual cost and production information for July 2024 follows: (Click the icon to view actual cost and production information.) Read the requirements. Journalize the applied manufacturing overhead. Date Accounts and Explanation Debit Credit Jul. Journalize the movement of all production from Work-in-Process Inventory. Date Accounts and Explanation Debit Credit Jul. Cole manufactures coffee mugs that it sells to other companies for customizing with their own logos. Cole prepares flexible budgets and uses a standard cost system to control manufacturing costs. The standard unit cost of a coffee mug is based on static budget volume of 60,200 coffee mugs per month: (Click the icon to view the cost data.) Actual cost and production information for July 2024 follows: Click the icon to view actual cost and production information.) Read the requirements Journalize the adjusting of the Manufacturing Overhead account. (Prepare a single compound journal entry.) Date Accounts and Explanation Debit Credit Jul. Requirement 5. Cole intentionally hired more highly skilled workers during How did this decision affect the cost variances? Overall, was the decision wise? Hiring more-skilled, higher-paid labor led to direct labor cost variance. Given the direct labor efficiency variance, it appear that these more-skilled workers performed efficiently. The overall net effect is thus management's decision was