The Beal Manufacturing Company's 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 (DLH). At the beginning of 2009, Beal adopted the following standards for its manufacturing costs: (see attached) the denominator level for total manufacturing overhead per month in 2009 is 40,000 direct manufacturing labor hours. Beal's flexible budget for January 2009 was based on this denominator level. The records for January indicated the following:
1. Prepare a schedule of total standard manufacturing costs for the 7,800 output units in January 2009.
2. For the month of January 2009, 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
Direct Materials purchased ........................................................25,000 lbs. at $5.20 per lb.
Direct Materials used ..........................................................................................23,100 lbs.
Direct Manufacturing labor ......................................................40,100 hrs at $14.60 per hr
Total actual manufacturing overhead (variable and fixed) .............................$600,000.00
Actual Production ..................................................................................7,800 outputunits
Step by Step Answer:
Horngrens Cost Accounting A Managerial Emphasis
ISBN: 978-0134475585
16th edition
Authors: Srikant M. Datar, Madhav V. Rajan