P12-43A Under a contract with the provincial government, ChemLabs Inc. analyzes
ID: 2544020 • Letter: P
Question
P12-43A Under a contract with the provincial government, ChemLabs Inc. analyzes the chemical and bacterial com position of well water in various municipalities in the interior of British Columbia. The contract price is $25.20 per test So 1, 2, 3) Prepare a flexible udget, determine performed. The normal volume is 10,000 tests per month. Each test requires two testing kits, which have a standard price tandard costs, and of $3.80 each. Direct labour to perform the test is 10 minutes at $22.80 per hour. At normal volume, the overhead costs calculate variances. are as follows: Variable overhead costs Indirect labour Utilities Labour-related costs Laboratory maintenance $18,000 4,000 15,000 11.000 48,000 Fixed overhead costs 28,000 Depreciation Supervison Base utilities Insurance Total overhead 9,000 2,000 69,000 $117,000 Overhead is allocated based on direct labour hours.Explanation / Answer
Requirement (a) Flexible Overhead Budget based on 80% of the normal volume Volume 100% 80% Number of Tests 10000 8000 Variable overhead costs Indirect Labor 18000 14400 Utilities 4000 3200 Labor related costs 15000 12000 Laboratory Maintenance 11000 8800 Total Variable Overhead costs 48000 38400 Fixed overhead costs Depreciation 28000 28000 Supervisor 30000 30000 Base utilities 9000 9000 Insurance 2000 2000 Total Fixed overhead costs 69000 69000 Total Overhead costs 117000 107400 Requirement (b) Standard Cost card for water test. Testing Kits =2*3.8 7.6 Direct Labor =22.80/6 3.8 Variable Overhead 28.8 per hour 10 minutes each 4.8 Fixed Overhead 41.4 per hour 10 minutes each 6.9 Total cost for water test 23.1 Requirement (c) Material Standard quanity*Standard price Actual quanity*Standard Price Actual Quantity*Actual price =9000*2*3.8 68400 =18500*3.8 70300 =70300/19000*18500 68450 Material Quantity Variance Material Price Variance =68400-70300 =70300-68450 -1900 Unfavourable 1850 Favourable Labor Standard quanity*Standard rate Actual quanity*Standard rate Actual Quantity*Actual rate =9000*3.8 34200 =1623*6*3.8 37004.4 Given 37646 Labor efficiency Variance Labor Rate variance =34200-37004.4 =38004.4-37646 -2804.4 Unfavourable 358.4 Favourable Requirement (d) Variable Overhead Actual Variable OH Cost Flexible Budget Standard Cost(VOH applied) Actual Quantity*Actual rate Actual Quantity*Standard rate Standard Quantity*Standard rate Given =1623*6*4.8 =9000*4.8 45200 46742.4 43200 VOH Spending variance VOH Efficiency Variance =46742.4-45200 =43200-46742.4 1542.4 Favourable -3542.4 Unfavourable
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.