yala Corporation accumulates the following data relative to jobs started and fin
ID: 2525840 • Letter: Y
Question
yala Corporation accumulates the following data relative to jobs started and finished during the month of June 2017.
Costs and Production Data
Actual
Standard
Overhead is applied on the basis of standard machine hours. 3.00 hours of machine time are required for each direct labor hour. The jobs were sold for $498,000. Selling and administrative expenses were $37,900. Assume that the amount of raw materials purchased equaled the amount used.
Compute all of the variances for (1) direct materials and (2) direct labor. (Round answers to 0 decimal places, e.g. 125.)
Compute the total overhead variance.
Total overhead variance
Prepare an income statement for management. (Ignore income taxes.)
Costs and Production Data
Actual
Standard
Raw materials unit cost $2.40 $2.25 Raw materials units used 11,100 10,400 Direct labor payroll $177,000 $171,360 Direct labor hours worked 15,000 15,300 Manufacturing overhead incurred $204,550 Manufacturing overhead applied $206,550 Machine hours expected to be used at normal capacity 41,500 Budgeted fixed overhead for June $62,250 Variable overhead rate per machine hour $3.00 Fixed overhead rate per machine hour $1.50Explanation / Answer
1 Direct Material Variance Price variance=(SR-AR)*AQ -1665 Unfavourable Usage variance=(SQ-AQ)*SR -1575 Unfavourable Total direct material variance -3240 Unfavourable 2 Direct labour variance Rate variance=(SR-AR)*AQ -9000 Unfavourable Efficiency variance=(SQ-AQ)*SR 3360 Favourable Total direct labour variance -5640 Unfavourable 3 Total overhead varaince(Actual overhead -applied overhead) -2000 Unfavourable =204550-(3*(3+1.5)*15300) Material Variance Actual Cost Actual Rate Actual Quantity Standard Cost Standard Rate Standard Quantity 26640 2.4 11100 23400 2.25 10400 (11100*2.4) (10400*2.25) Labour Var Actual Cost Actual Rate Actual Quantity Standard Cost Standard Rate Standard Quantity 177000 11.8 15000 171360 11.2 15300 (177000/15000) (171360/15300) Income Statement Sales Revenue 498000 Less: Direct material 23400 Direct Labour 171360 Overhead applied 206550 (3*(3+1.5)*15300) Cost of goods sold at standard cost 401310 Gross proft at standard 96690 (498000-401310) Variances: Matrial price var -1665 Material efficiency var -1575 Labor price var -9000 Labor efficiency var 3360 Total overhead varaince -2000 Gross profit (actual) 85810 Less: Selling & Admin Cost 37900 Net profit 47910
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