akky Company produces widgets. In the table below, the company has begin the cal
ID: 2454131 • Letter: A
Question
akky Company produces widgets. In the table below, the company has begin the calculation of the standard oost to make one widget. Using the standard manufacturing overhead data provided, complete the table labor hours. At the beginning of the year, management made the following estimates related to overhead: For Normal Capacity (estimated at the beginning of the year for a production level of below to show the total manufacturing cost of one widget. The standards are to be computed based upon normal annual production of 70,000 widgets for the year, with factory overhead applied based on direct 70,000 widgets) Estimated annual variable overhead costs a Estimated annual fixed overhead osts = $808,500 $241,500 $1,050,000 Total estimated annual overhead costs Total estimated annual direct labor hours (DLH) at 105,000 Total DLHs 100% of normal capacity (70,000 widgets) Variable factory overhead rate per direct labor hour Fixed factory overhead rate per direct labor hour Predetermined factory overhead rate per DLH -per DLH per DLH per DLH 1. Complete the Standard Cost Report: Wakky Company Standard Cost Report Widgets Unit of Product One Widget Product manufactured Standard Direct materials Direct labor Factory overhead applied 3 pounds 1.5 DLHs $5.00 per pound $12.00 per DLH Variable FOH Fixed FOH 1.5 DLHs 1.5 DLHs per DLH per DLH Calculated standard cost to manufacture 1 widget 2. Calculate the standard costs allowed for the actual output level of widgets: 75,000 widgets Total Standard t lb. total lbs allowed Direct materials cost Direct labor cost Factory overhead appliedPFOH Rate total DLH allowed total DLH alowed -per DLH applied per DLH PFOH Rate Standard cost allowed for actual output level 3,b0D,000 75,000 widgets for the year The actual cost and amounts of input to make the actual output of ended December 31, 2013 was: Total Direct materials: Direct labor Factory Overhead (FOH): 230,000 lbs 111,000 DLH @ $4.50 per pound 35 $1325 per DLH-.D d (Fow) 11,00bs Total variable FOH costs Total fixed FOH costs Total actual FOH costs for 2013 $850,000 $241,500 Actual cost for actual output levelSa 2s 3. Calculate the total manufacturing cost varianceExplanation / Answer
3. Material price Variance = (Actual price - standard price) * Actual quantity
= ($4.50 - $5) * 230000
= ($115000) Favorable
Material Quantity Variance = (Actual Usage - standard usage) * Standard Cost
= (230000 - 225000) * $5
= 5000 * $5
= 25000 Unfavorable
Total material variance = Standard cost - Actual cost
= $1125000 - $1035000
= 90000 Favorable
4. Labor rate Variance = (Actual rate - Standard rate) * Actual hours
= ( $13.25 - $12) * 111000
= $138750 Unfavorable
Labor time Variance = (Actual Hour - standard hour) * Standard rate
= (111000 - 112500 ) * 12
= ($18000) Favorable
Total labor Variance = Standard hour Cost - Actual hour cost
= $1350000 - $1470750
= ($120750) Unfavorable
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