Vitex, Inc. manufactures a popular consumer product and it has provided the foll
ID: 2578159 • Letter: V
Question
Vitex, Inc. manufactures a popular consumer product and it has provided the following data excerpts from its standard cost system:
*Applied to Work in Process during the period.
The company's manufacturing overhead cost is applied to production on the basis of direct labor-hours. All of the materials purchased during the period were used in production. Work in process inventories are insignificant and can be ignored.
Required:
1. How many units were produced last period?
2. How many pounds of direct material were purchased and used in production?
3. What was the actual cost per pound of material? (Round your answer to 2 decimal places.)
4. How many actual direct labor-hours were worked during the period?
5. What was the actual rate paid per direct labor-hour? (Round your answer to 2 decimal places.)
6. How much actual variable manufacturing overhead cost was incurred during the period?
Inputs (1) Standard Quantity or Hours (2)Standard
Price
or Rate Standard
Cost
(1) × (2) Direct materials 2.10 pounds $ 16.70 per pound $ 35.07 Direct labor 1.00 hours $ 15.20 per hour $ 15.20 Variable manufacturing overhead 1.00 hours $ 9.30 per hour $ 9.30 Total standard cost per unit $ 59.57
Cost* Price
or Rate Quantity or
Efficiency Direct materials $ 701,400 $ 12,760 F $ 33,400 U Direct labor $ 304,000 $ 4,200 U $ 15,200 U Variable manufacturing overhead $ 186,000 $ 4,600 F $ ?† U
*Applied to Work in Process during the period.
The company's manufacturing overhead cost is applied to production on the basis of direct labor-hours. All of the materials purchased during the period were used in production. Work in process inventories are insignificant and can be ignored.
Required:
1. How many units were produced last period?
2. How many pounds of direct material were purchased and used in production?
3. What was the actual cost per pound of material? (Round your answer to 2 decimal places.)
4. How many actual direct labor-hours were worked during the period?
5. What was the actual rate paid per direct labor-hour? (Round your answer to 2 decimal places.)
6. How much actual variable manufacturing overhead cost was incurred during the period?
Quantity or Hours 2.10 pounds 1.00 hours 1.00 hours Price or Rate $16.70 per pound 15.20 per hour $ 9.30 per hour Cost Inputs Direct materials Direct labor Variable manufacturing overhead 35.07 15.20 9.30 $59.57 Total standard cost per unit Total Variances Reported Standard Price Quantity or Cost $701,400 12,760 F 33,400 U $304,000 4,200 U 15,200 U $186,000 4,600 F $ or Rate Efficiency Direct materials Direct labor Variable manufacturing overhead Applied to Work in Process during the period The company's manufacturing overhead cost is applied to production on the basis of direct labor-hours. All of the materials purchased during the period were used in production. Work in process inventories are insignificant and can be ignored Required: 1. How many units were produced last period? 2. How many pounds of direct material were purchased and used in production? 3. What was the actual cost per pound of material? (Round your answer to 2 decimal places.) 4. How many actual direct labor-hours were worked during the period? 5. What was the actual rate paid per direct labor-hour? (Round your answer to 2 decimal places.) 6. How much actual variable manufacturing overhead cost was incurred during the period? 1. 2. 3. 4. 5. 6. Number of units produced Pounds of direct material purchased and used in production Actual cost per pound Actual direct labor-hours Actual rate per direct labor-hour Actual variable manufacturing overhead costExplanation / Answer
Explanations -
1. No of units produced last year
Total Cost = Direct materials + Direct labor + Variable manufacturing overhead
= 701,400 + 304,000 + 186,000 = $1191400
Total standard cost per unit = $59.57
So, No of units produced = 20000
2. Pounds of direct material purchased and used in production
Units produced last year = 20000
Standard material Required per unit = 2.10 pound
Standard total material = 20000 x 2.10 = 42000 Pounds
Material Quantity variance = SP(SQ - AQ) = 33,400U or -$33,400
Or $16.70(42000 - AQ) = -$33,400
Or AQ = ($33400/$16.70) + 42000 = 44000 pound
3. Actual Cost Per pound
Direct Material Price Variance = AQ (SP - AP) = 12,760F
Or, 44000(16.70 - AP) = 12,760
or, AP =16.70 - (12,760 / 44000) = $16.41 per pound
4. Actual Direct labour hours
Standard units = 20000
Standard hour per unit = 1 hour
Total Standard Hours = 1 x 20000= 20000 hours
Direct Labour Efficiency Variance = SR (SH - AH) = 15,200U or -$15,200
Or, $15.20 ( 20000 - AH) = -15,200
Or, AH = (15,200/15.20) + 20000 = 21000 hours
5. Actual rate per direct labour hour
Direct Labour Price Variance = AH (SR - AR) = $4,200U or -$4,200
Or, 21000 (15.20 - AR) = -4,200
Or, AR = (4200/21000) + 15.20 = $15.40 per hour
6. Actual Variable manufacturing overhead cost
Variable manufacturing overhead Price Variance = AH (SR - AR) = $4600F
Or, 21000 (9.30 - AR) = 4600
Or AR = 9.30 - (4600/21000) = $9.08 per hour (Approx) - Round to 2 decimal places
Standard Hours For Variable manufacturing overhead = 20000 units X 1 hour = 20000 hour
Variable manufacturing overhead Efficiency Variance = SR (SH - AH) = 9.30 (20000 - 21000) = -$9300 or $9300U
[Note - The company's manufacturing overhead cost is applied to production on the basis of direct labor-hours.]
Variable manufacturing overhead cost = Standard Cost + Price Varince + Efficiency Variance
= $186,000 + $4600(F) + $9300(U)
= $186,000 - $4600 + $9300
= $190700
[ Favorable cost variance means Actual Cost is less than standard cost and Unfavorable variance means Actual cost is higher than standard cost]
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