Benderboard produces corrugated board containers that the nearby wine industry u

Question

Benderboard produces corrugated board containers that the nearby wine industry uses to package wine in bulk. The company uses a standard cost system to account for manufacturing costs. The standard costs for a one bulk container include the following:

Direct Labor (2/3 hour @ $30/hr)

Manufacturing Overhead

At the end of May, the ledgers show the following data:

The firm pays all its purchases in the month following the month of purchase. The firm manufactured and sold 4,500 containers in May. All variances are identified and recorded at the earliest possible time.

REQUIRED: Compute each of the following items for the firm for the month of May. Show all of your computations.

1. Total standard direct labor cost for units produced in May.

2. Total direct labor-hours worked.

3. Actual direct labor hourly wage rate.

4. Total standard quantity of direct materials (in pounds) for the containers manufactured.

5. Total pounds of direct materials used.

6. Total pounds of direct materials purchased. 7. Actual direct materials price per pound.

Direct Labor (2/3 hour @ $30/hr)

Manufacturing Overhead

Explanation / Answer

Standard Cost per container Details Qty/Hr Rate Cost Std Qty Hour for 4500 units actual Production Direct Materials                6.0                    5.0                  30.0       27,000.0 Direct Labor           0.667                  30.0                  20.0          3,000.0 Manufacturing Overhead                  10.0 Total                    60.0      1.0 Standard Labor hours for units produced in May=4500*0.667=       3,000.0 Direct Labor efficiency Variance=6000 F Direct LAbor Efficiency Variance =Std Rate ( Actual Hrs used-Std Hrs for actual output)   =30*(Actual Hrs Used-3000)=-6000 Actual Hours =2800      2.0 So Total direct Albor hrs worked =2800      3.0 Direct Labor Rate variance =4200 U Direct Labor Rate Variance= Actual Hrs Used( Actual Rate-Std Rate) =2800*(Actual Rate-30)=4200 Actual rate =31.50 So Actual Direct Labor Rate /Hr =31.50      4.0 Standard Qty of Direct Materials for actual production in May=     27,000.0      5.0 Direct Material Efficiency Variance =5000 U Direct Material Efficiency Variance =Std Rate ( Actual Qty used-Std qty for actual output)   =5*(Actual Qty used -27000)=5000 Actual Qty of Materials used =28000 lb      7.0 Direct Material Price variance =6500 U Direct Materials Price Variance= Actual Qty Used( Actual Rate-Std Rate) =28000*(Actual Rate -5)=6500 Actual Rate =5.232/lb      6.0 Total Purchase value in May =136500 Rate of material =5.232/lb Qty purchased=136500/5.232=     26,089.4 lb

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