Martell Company produces and sells a single product. A standard cost card for th

Question

Martell Company produces and sells a single product. A standard cost card for the product follows Direct materials: 2 feet at $9.50 per foot $19.00 Direct labor: 1.5 hours at $8.00 per hour.... 12.00 Variable overhead: 1.5 hours at $2.50 per hour 3.75 Fixed overhead: 1.5 hours at $6.00 per hour 9.00 $43.75 Standard cost per unit The following information is available for the year just ended The company manufactured and sold 30,000 units of product during the year A total of 62,000 feet of material were purchased during the year at a cost of $8.90 per foot. 58,000 feet of this material was used to manufacture the 30,000 units. There was no beginning or ending inventories for the year The company worked 47,000 direct labor hours during the year at a cost of $8.20 per hour Overhead is applied to products on a basis of direct labor hours. Data relating to overhead costs follow: a. b. c. d. Budgeted fixed overhead costs . . . . . . .. . . . . . . . Actual variable overhead incurred . . . . . Actual fixed overhead incurred . . . . . . . . .. . $215,000 ..10,000 211,000 REQUIRED: (show work) a. Compute the direct material price and quantity variances, the direct labor rate and efficiency variance, the variable overhead spending and efficiency variances and the fixed overhead budget and volun b. Prepare the journal entries for direct material and direct labor costs and their variances

Explanation / Answer

a) material Price varaince 37200 F (AQ*AR)-(AQ*SR) -37200 (62000*8.9)-(62000*9.5) b) Material Qty varaince 19000 F SR*(AQ-SQ allowed) -19000 9.5*(58000-(30000*2)) Labor rate variance 9400 U (AH*AR)-(AH*SR) (47000*8.2)-(47000*8) Labor efficiecy varaince 16000 U SR*(AH-SH allowed) 8*(47000-(30000*1.5)) Varaible overhead rate variance 7500 F (AH*AR)-(AH*SR) -7500 110000-(47000*2.5) Varaible overhead efficiency varaince SR*(AH-SH allowed) 5000 U 2.5*(47000-(30000*1.5)) 4) Fixed overhead budget variance Actual-Budgeted 4000 F 211000-215000 Fixed overhead volume varaince Applied-Budgeted 55000 U (30000*1.5*6)-215000 ans 2 Dr Cr Raw Material Inventory 589000 Direct material price varaince 37200 Accounts Payable (62000*8.9) 551800 Work In process (30000*2*8.9) 570000 Direct material qty varaince 19000 Raw Material Inventory   551000 Work In process 360000 Labor rate varaince 9400 Labor efficiency varaince 16000 Wages payable (47000*8.2) 385400

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