thanks again for any help on this You have been given the following list of vari
ID: 2557396 • Letter: T
Question
thanks again for any help on this
You have been given the following list of variances for the Pennadi Company Direct materials price variance Direct materials quantity variance Direct labour rate variance Direct labour efficiency variance Variable overhead spending variance Variable overhead efficiency variance Fixed overhead budget variance Fixed overhead volume variance $11,700 U 11,700 U 4,420 F 45,000 U 2,940 U 5,700 U 4,700 U 68,400 F You have also been given the following information Actual units produced Budgeted units of production (normal volume) Standard labour-hours for actual output Standard material units for actual output Actual direct labour costs Actual cost of direct materials 26,000 20,000 13,000 370,000 $235,580 $391,950 Overhead is applied using direct labour-hours. Variable overhead is applied at the rate of $10 per direct labour-hour. The materials purchase price was $0.670.(Attempt the following questions in the order listed.)Explanation / Answer
Requirement 1
Actual cost of direct materials
391950
The material purchase price
0.67
Actual number of units purchased (391950/0.670)
585000
Requirement 2
Standard cost of actual number of units (585000 x 0.65)
380250
Standard price of direct materials
0.65
Requirement 3
391950
Requirement 4
380250
Requirement 5
370000 units
Requirement 6
Actual direct labour cost
235580
Less: Direct labour efficiency variance
45000
190580
Add: Direct labour rate variance
4420
195000
Thus, standard labour cost should have been
195000
Standard labour hour
13000
Since actual labour cost
235580
Actual labour hour worked (13000 x 235580 / 195000)
15705.33
Requirement 7
Direct materials
0.65
Standard materials units
370000
Standard production
20000
Materials per unit of output
18.5
12.025
Thus, standard labour cost should have been
195000
Standard labour hours
13000
Standard labour cost for each unit of output
9.75
Variable cost (0.65 x 10)
6.5
28.275
Requirement 8
Fixed overhead volume allocation (F)
68400
Less: Fixed overhead budget variance
4700
63700
Budgeted unit of production
20000
Actual unit of production
26000
Difference in production (26000 - 20000)
6000
Fixed overhead allocation (63700 /6000)
10.61667
Requirement 9
Number of units produced
26000
Fixed overhead allocation (63700 /6000)
10.61667
Actual fixed overhead cost
276033.3
Budgeted fixed costs
Actual fixed overhead cost
276033.3
Less: Favourable fixed overhead volume variance
68400
207633.3
Add: Unfavourable fixed overhead budget variance
4700
212333.3
Allocated fixed costs
Actual fixed overhead cost
276033.3
Number of units produced
26000
Allocated fixed costs (276033.3/26000)
10.61667
Requirement 10:
Allocated fixed costs (276033.3/26000)
10.61667
Actual fixed overhead cost
276033.3
Less: Budgeted fixed costs
212333.3
Over applied fixed overhead cost
63700
Budgeted fixed costs
1.3
Requirement 1
Actual cost of direct materials
391950
The material purchase price
0.67
Actual number of units purchased (391950/0.670)
585000
Requirement 2
Standard cost of actual number of units (585000 x 0.65)
380250
Standard price of direct materials
0.65
Requirement 3
391950
Requirement 4
380250
Requirement 5
370000 units
Requirement 6
Actual direct labour cost
235580
Less: Direct labour efficiency variance
45000
190580
Add: Direct labour rate variance
4420
195000
Thus, standard labour cost should have been
195000
Standard labour hour
13000
Since actual labour cost
235580
Actual labour hour worked (13000 x 235580 / 195000)
15705.33
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