Selling price is $10/tin. The cost is $8/tin This includes $6 of direct material

Question

Selling price is $10/tin. The cost is $8/tin This includes $6 of direct material and $1.50 of direct labor. Direct labor is 1 hour per 100 tins. Annual manufacturing overhead is estimated at $100,000 for the expected sales of 200,000 tins. The breakdown for manufacturing overhead includes 85% of variable costs.

1a. What is the standard fixed manufacturing overhead cost per tin?

b. The Volume Variance is $750 F. How many units were actually produced during the year?

c. How much is total budgeted fixed manufacturing overhead?

d. The Controllable Variance is $3250 U. What was the total dollar amount for actual manufacturing overhead?

e. What are the total standard hours allowed for actual production?

6. The Labor Quantity Variance is $300 U. How many total actual hours were worked?

7. What is the total standard cost of direct materials for total actual production?

8. Total Material Price Variance is $16,800 U. What was the actual direct material cost for total actual production?

Explanation / Answer

1. MOH cost per tin = 100000/200000 = 0.50$

Fixed MOH = 0.50*(100-85%) = 0.075$

2 FOH volume variance = 750

(Actual QTY-Budgeted QTy.)*Std. FOH rate

(AQ-200000)*0.075 = 750

AQ-200000= 750/0.075

AQ = 10000+200000

AQ = 210000 units

3. Total budgeted FOH = 0.075*200000 = 15000 $

4. Controllable variance =(3250)

Actual MOH-budgeted allowance based on STD hrs allowed = (3250)

Actual MOH= budgeted allowance based on Std. hrs allowed-3250

= FOH+variable overhead based on budgeted rate-3250

= 15000+(0.425*210000)-3250

=15000+89250-3250

Actual MOH =101000

VOH rate = 0.5*85%=0.425

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