Direct Materials (0.2 lbs @ $0.25 per lb)		$0.05
Direct Labor (3 minutes @ $0.14 per minute)		0.42
Manufacturing Overhead:
Variable (3 minutes @ $0.06 per minute)	$0.18
Fixed (3 minutes @ $0.15 per minute)	0.45	0.63
Total Cost per Coffee Mug		$1.10

a.

There were no beginning or ending inventory balances. All expenditures were on account.

b.

Actual production and sales were

62,600

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

199,000

minutes at a total cost of

$31,840.

e.

Actual overhead cost was

$8,955

variable and

$31,945

fixed.

f.

Selling and administrative costs were

$123,000.

quirements:

1.		Compute the cost and efficiency variances for direct materials and direct labor.
2.		Journalize the purchase and usage of direct materials and the assignment of direct labor, including the related variances.
3.		For manufacturing overhead, compute the variable overhead cost and efficiency variances and the fixed overhead cost and volume variances.
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.
5.		Kyler intentionally hired more highly skilled workers during July. How did this decision affect the cost variances? Overall, was the decision wise?