Fulton Company produced 5,000 book bags in June, and actual amounts were as Fult

Question

Fulton Company produced 5,000 book bags in June, and actual amounts were as Fulton's standards were as follows follows Direct materials (cloth) Direct labor Variable overhead Fixed overhead 5,600 yards 2,600 hours $1.80 per yard $15.00 per hour Direct materials (cloth) Direct labor Variable overhead Fixed overhead 1 yard(s) per book bag $1.80 per yaro 0.60 direct labor hours per book bag@ $15.30 per direct labor hour 0.60 direct labor hours per book bag@ $2.20 per direct labor hour $18,000 (0.60 direct labor hours per book bag$5.00 per direct labor hour) $ 4,900 20,000 Requirement 1. Compute cost and efficiency variances for direct materials, direct labor, and variable overhead Select the formulas to calculate direct materials cost and efficiency variances, then enter the variance amounts and the total. (Abbreviations used: AC actual cost AQ = actual quantity: FOH = fixed overhead; SC = standard cost SQ = standard quantity. Label each variance as favorable (F) or unfavorable (U). Enter a "0" for any zero balances. For any $0 variances, leave the Favorable (F/Unfavorable (U) input blank.) ormu Variance Direct materials cost variance (AC -SC)x AQ Direct materials efficiency variance Total direct materials variance Next, select the formulas to calculate direct labor cost and efficiency variances, then enter the variance amounts and the total. (Abbreviations used: AC actual cost AQ = actual quantity: FOH = fixed overhead: SC = standard cost SQ = standard quantity. Label each variance as favorable (F) or unfavorable (U).) Formula Variance Direct labor cost variance Direct labor efficiency variance Total direct labor variance Finally, select the formulas to calculate the variable overhead cost and efficiency variances, then enter the variance amounts and the total. (Abbreviations used: AC = actual cost AQ = actual quantity: FOH = fixed overhead. SC = standard cost SQ = standard quantity: VOH = variable overhead.) ormu Variance VOH cost variance VOH efficiency variance- Total variable overhead variance Requirement 2. Compute the cost and volume variances for fixed overhead Select the formulas to calculate the fixed overhead cost and volume variances, then enter the variance amounts and the total. (Abbreviations used: AC = actual cost AQ = actual quantity; FOH = fixed overhead; SC-standard cost; SQ = standard quantity. Label each variance as favorable (F) or unfavorable (U). Enter a "0" for any zero balances. For any $0 variances, leave the Favorable (F)/Unfavorable (U) input blank.) Formula Variance FOH cost variance FOH volume variance - Total fixed overhead variance

Explanation / Answer

GIVEN Actuals' Materials : 5600 QTY at $1.80 PER YARD = $10080 Labour : 2600hrs at $15.00 Per Hour = $39000 VOH : 2600hrs at $1.885 Per Hour = $4900 FOH : 2600hrs at $7.69 Per Hour = $20000 7.6923 Standard' Note: 1 Materials : 5000 QTY at $1.80 PER YARD = $9000 Note: 2 Labour : 3000hrs at $15.30 Per Hour = $45900 Note: 3 VOH : 3000hrs at $2.20 Per Hour = $6600 Note: 4 FOH : 3000hrs at $6.00 Per Hour $18000 (#) Notes 1 5000* is 1 yard per book for 5000 Book bags 2 3000 hrs* is .60 labour hours for 5000 book bags 3 3000 hrs* is .60 labour hours for 5000 book bags 4 (#) 3000 hrs* is .60 labour hours for 5000 book bags* $ 6 per labour Hour is $18000, Note: Adverse Variance Arises when the Actual Cost incurred is greater than Standard Cost            Meaning the cost spent is more than the Budgeted cost Note: Favourable Variance Arises when the Actual Cost incurred is lesser than Standard Cost            Meaning the cost spent is less than the Budgeted cost resulting in profit Formula Variance Direct materials Cost Variance (SC-AC)*AQ ($1.8-$1.8)* 5600 0 F Direct materials Efficiency Variance (SQ-AQ)*SP ($5000-$5600)*1.8 1080 A Total Direct Material Variance 1080 A Here the Actual quantity usage is more than Standard quantity resulting in adverse variance Direct Labour Cost Variance (SR-AR)*AH ($15.30-$15.00)*2600 780 F Direct Labour Efficiency Variance (SH-AH)*SR ($3000-$2600)*15.3 6120 F Total Direct Labour Variance 6900 F Here Actual Hours and Actual rate is less compared to Standard Qty and Rate resulting in profit in cost and efficiency VOH Cost Variance (SR-AR)*AH ($2.20-$1.885)*2600 820 F VOH Efficiency Variance (SH-AH)*SR ($3000-$2600)*2.2 880 F Total VOH Variance 1700 F Here Actual Hours and Actual rate is less compared to Standard Qty and Rate resulting in profit in cost and efficiency FOH Cost Variance (SR-AR)*AH ($6.00-$7.692)*2600 4400 A FOH Efficiency Variance (SH-AH)*SR ($3000-$2600)*6 2400 F Total FOH Variance 2000 A Here Actual Rate is more than standard rate resulting in adverse Varaince Here Actual Hours is less than Standard Hours resulting in adverse Varaince Net Effect is adverse which can be ascertained through the calculation

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---

---

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