Bullseye Company manufactures dartboards. Its standard cost information follows:
ID: 2544953 • Letter: B
Question
Bullseye Company manufactures dartboards. Its standard cost information follows:
Bullseye has the following actual results for the month of September:
Required:
1. Calculate the direct materials price, quantity, and total spending variances for Bullseye. (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.)
2. Calculate the direct labor rate, efficiency, and total spending variances for Bullseye.(Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.)
3. Calculate the variable overhead rate, efficiency, and total spending variances for Bullseye. (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable/Overapplied and "U" for unfavorable/underapplied.)
Standard Quantity Standard Price (Rate) Standard Unit Cost Direct materials (cork board) 3.50 sq. ft. $ 2.40 per sq. ft. $ 8.40 Direct labor 1 hrs. $ 11.00 per hr. 11.00 Variable manufacturing overhead (based on direct labor hours) 1 hrs. $ 0.65 per hr. 0.65 Fixed manufacturing overhead ($58,500 ÷ 130,000 units) 0.45Explanation / Answer
1. Actual cost of cork board = 1000000/400000 = $2.50
. Direct materials price vaariance = (2.40-2.50)*400000 = $40,000 U
Direct material quantity variance = (385000-400000)*2.40 = $36,000 U
Total spending variance = $40000+$36000 = $ 76,000 U
2.Actuallabour rate per hour = 1262500/125000 = $10.1
Labour rate variance = (11-10.1)*125000 = $1,12,500 F
Labour Efficiency variance = (110000-125000)*11 = $1,65,000 U
Total Spending variance = $112500F+$165000U =$52,500 U
3. Actual variable overhead cost perhour = 72000/125000 = $.576 per hour
Variable overhead rate variance = (.65-576)*125000 = $9,250F
Variable overhead efficiency variance = (125000- 110000)*.65 = $9,750 U
Total spending variance = $9250F + $9750U = $500 U
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