Req. A

	Actual Cost	Flex Budget
Direct Material	40538	41250
Direct Labor	51340	55000
Variable overhead	165000	165000
Fixed overhead	23000	20000
Total	279878	281250

Calculation:

Standard cost ( Flex Budget)
	Unit	cost	Units for 11 batches		Cost for 11 batches
Direct Material	0.5 yards	$ 75 Per yard	550	Yards	41250
Direct Labor	2.5 direct labor hour	$ 20 per direct labor hour	2750	direct labor hour	55000
Variable overhead		$ 60 per direct labor hour			165000
Fixed overhead		$ 20000 per month			20000
Total Cost					281250

Variance calculation:

Actual Cost
	Unit	Total cost	Cost
Direct Material	560 yards	$ 40,538.00	$ 72.39	Per yard
Direct Labor	2625 DLH	$ 51,340.00	$ 19.56	Per DLH
Variable overhead		$ 165,000.00	$ 62.86	Per DLH
Fixed overhead		$ 23,000.00
Total Cost		$ 279,878.00

Material Variance					F/U
Price Variance
	Actual Price	Standard Price	Actual Material	Variance
Direct Material	( 72.39	- 75 )	* 560	= 1462	F
Quantity Variance
	Actual Material	Standard Material	Standard Price	Variance
Direct Material	( 560	- 550 )	* 75	= 750	U
Labor Variance
Rate Variance
	Actual Rate	Standard Rate	Actual DLH	Variance
Direct Labor	( 19.56	- 20 )	* 2625	= 1160	F
Efficiency Variance
	Actual DLH	Standard DLH	Standard Rate	Variance
Direct Labor	( 2625	- 2750 )	* 20	= 2500	F
Variable Overhead Variance
Rate Variance
	Actual Rate	Standard Rate	Actual DLH	Variance
Variable Overhead	( 62.86	- 60 )	* 2625	= 7500	U
Efficiency Variance
	Actual DLH	Standard DLH	Standard Rate	Variance
Variable Overhead	( 2625	- 2750 )	* 60	= 7500	F
Fixed Overhead cost variance
Volume Variance
	Actual fixed overhead	Standard fixed overhead	Variance
Fixed overhead	23000	- 20000	3000	U

Req. B

COGS as per Standard Cost	$ 281,250.00
Material Price variance	$ (1,462.00)
Material Quantity variance	$ 750.00
Labor Rate Variance	$ (1,160.00)
Labor Efficiency variance	$ (2,500.00)
Variable overhead Rate variance	$ 7,500.00
Variable overhead efficiency variance	$ (7,500.00)
Fixed overhead volume variance	$ 3,000.00
Actual Cost of Goods Sold	$ 279,878.00
Net change in COGS	$ (1,372.00)

Part 2

Prepare the journal entries to record the activities discussed above:

• Record the use of direct materials with price and usage variances
• Record the incurrence of direct labor with rate and efficiency variances
• Record the incurrence of variable and fixed overhead with spending, efficiency, and production volume variances
• Record the transfer of COGM to FG Inventory
• Record the transfer of goods sold from FG Inventory to COGS
• Close all variances to COGS

Post these entries to T-accounts and come to ending balances:

• Assume all overhead spending comes from cash
• Remember that there is no beginning or ending inventory for WIP and FG