Vitex, Inc. manufactures a popular consumer product and it has provided the foll
ID: 2334264 • Letter: V
Question
Vitex, Inc. manufactures a popular consumer product and it has provided the following data excerpts from its standard cost system (1) Standard Quantity or Standard Price or Rate Standard Cost Inputs Direct materials Direct labor Variable manufacturing overhead Hours 2.40 pounds 1.00 hours 1.00 hours $16.90 per pound $16.00 per hour 9.50 per hour $40.56 $16.00 9.50 $66.06 Total standard cost per unit Total Standard Variances Reported Price Quantity or Eff 33,800 U Cost* $811,200 $.14,500 F $320,000 $ 4,200 U $190,000 or Rate iciency Direct materials Direct labor 16,000 U Variable manufacturing overhead 4,000 F Applied to Work in Process during the period The company's manufacturing overhead cost is applied to production on the basis of direct labor-hours. All of the materials purchased during the period were used in production. Work in process inventories are insignificant and can be ignored Required 1. How many units were produced last period? 2. How many pounds of direct material were purchased and used in production?Explanation / Answer
Answer 5 Direct Labor rate variance = Actual labor hours * (Actual labor rate per hour - Standard labor rate per hour) Direct Labor rate variance = $4200 U Actual labor hours = 21000 Standard labor rate per hour = $16 $4200 = 21000 hours * (Actual labor rate per hour - $16) $0.20 = Actual labor rate per hour - $16 Actual labor rate per hour = $16 + $0.20 = $16.20 Answer 6 Calculation of Actual variable manufacturing overhead cost We can use the variable manufacturing overhead spending (rate) variance formula to find out the actual variable manufacturing overhead cost. Variable manufacturing overhead spending variance = Actual Costs - (Actual direct labour hours x Standard variable overhead rate) -$4000 = Actual costs - (21000 hours x $9.50) -$4000 = Actual costs - $199500 Actual variable manufacturing overhead costs = $1,95,500
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