Problem 1 During July, PK’s Fine Feline Foods produced 147 batches of its gourme

Question

Problem 1

During July, PK’s Fine Feline Foods produced 147 batches of its gourmet kitten formula. Each batch weighs 1,000 pounds. To produce this quantity of output, the company purchased and used 148,450 pounds of direct material at a total cost of $ 593,800. It also incurred direct labor costs of $ 17,600 for the 2,200 hours worked by employees on the kitten formula crew. Manufacturing overhead incurred during July totaled $ 3,625 of which $ 2,450 was considered fixed. Standard cost information per 1,000-pound batch of kitten formula follows:

            Direct materials - $ 4.20 per pound

            Standard quantity allowed per batch – 1,020 pounds

            Direct labor rate - $ 8.50 per hour

            Standard hours allowed per batch – 14 D/L hours

            Budgeted fixed overhead - $ 2,800 per month

            Budgeted level of production - 140 batches per month

            Overhead application rate:

                        Fixed   (2,800 / 140 batches) 20 per batch

                        Variable (140 batches)            9 per batch

                        Total                                        29 per batch   

Compute the following:

a, direct materials cost and efficiency variances

b, direct labor cost and efficiency variances

c, variable overhead cost and efficiency variances

d, fixed overhead cost and volume variances

Explanation / Answer

Problem 1 During July, PK’s Fine Feline Foods produced 147 batches of its gourme

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