You have been given the following list of variances for the Pennadi Company: Dir

Question

You have been given the following list of variances for the Pennadi Company: Direct materials price variance $ 16,800 U Direct materials quantity variance 12,000 U Direct labour rate variance 16,270 F Direct labour efficiency variance 27,000 U Variable overhead spending variance 3,120 U Variable overhead efficiency variance 6,000 U Fixed overhead budget variance 5,000 U Fixed overhead volume variance 53,250 F You have also been given the following information: Actual units produced 25,000 Budgeted units of production (normal volume) 20,000 Standard labour-hours for actual output 12,500 Standard material units for actual output 400,000 Actual direct labour costs $ 235,730 Actual cost of direct materials $ 496,800 Overhead is applied using direct labour-hours. Variable overhead is applied at the rate of $10 per direct labour-hour. The materials purchase price was $0.828.(Attempt the following questions in the order listed.)

Explanation / Answer

Solution 6:

Actual direct labor cost = $235,730

Standard labor hours for actual output = 12500

Standard variable overhead rate = $10 per direct labor hour

Variable overhead efficiency variance = $6,000 U

(SH - AH) * SR = -$6000

(12500 - AH) * $10 = -6000

AH = 13100 hours

Therefore actual hours of labor worked = 13100 hours

Solution 7 :

Standard cost per unit of output produced = Direct material per unit + Direct labor per unit + Variable overhead per unit

Standard material for actual output = 400,000

Actual price of direct material = $0.828

Actual cost of direct material = $496,800

Actual quantity purchase for direct material = $496,800 / $0.828 = 600000 units

Direct material price variance = $16,800 U

(SP - AP) *AQ Purchased = -$16,800

(SP - $0.828) * 600000 = $16,800

SP = $0.80 per unit

Actual output of finished goods = 25000 units

Standard material units for actual output = 400000

Standard material required for 1 unit = 400000 / 25000 = 16 units

Standard material cost for one finished goods of output = 16* $0.80 = $12.80

Direct labor efficiecny variance = $27,000 U

(SH - AH) * SR = -$27000

(12500 - 13100) * SR = -27000

SR = $45 per hour

Standard labor hour for 1 unit = 12500 / 25000 = 0.50 hours

standard direct labor cost per unit = $45 * 0.50 = $22.50 per unit

Standard variable overhead per unit = $10 * 0.50 = $5 per unit

Standard cost per unit of output produced = $12.80 + $22.50 + $5 = $40.30 per unit

Solution 8:

Fixed overhead volume variance = $53,250 F

Overhead applied - Budgeted overhead = $53,250

(Standard hours for actual output * Allocation rate) - (Standard hours for budgeted output * Allocation rate) = $53,250

(12500*Allocation rate) - (20000/2 * Allocation rate) = $53,250

Allocation rate = $21.30 per hour

Solution 9:

Budgeted fixed overhead = 10000 * $21.30 = $213,000

Fixed overhead budget variance = $5,000 U

Budgeted fixed overhead - Actual fixed overhead = -$5,000

$213,000 - Actual fixed overhead = -$5,000

Actual fixed overhead = $218,000

Allocated fixed overhead = 12500 * $21.30 = $266,250

Solution 10:

Overapplied fixed overhead cost = Allocated overhead - Actual overhead

= $266,250 - $218,000 = $48,250

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.