Up North Industries manufactures a single product in which variable manufacturin

Question

Up North Industries manufactures a single product in which variable manufacturing overhead is assigned on the basis of direct labor hours. The company uses a standard cost system and has established the following standards for one unit of product Direct materials Direct labor Manufacturing overbead Standard Quantity 1-5 pounds 0.6 hours 0.6 hours Standard Price or Rate $3.00 per pound $6.00 per hour $10.00 per hour Standard Cost S4so $3.60 $6.00 During March, the following activity was recorded by the company: Company produced 3,000 units. 5,000 pounds of material was purchased and used for $16,000. 1,600 direct labor hours were worked at a rate of $6.50. Overhead is applied on the basis of direct labor hours. . Variable overhead was $12,250; fixed overhead was 6,150 31. What are the materials price and quantity variances? (3 points each) 32. What are the labor rate and efficiency variances? (3 points each) 33. What is the total overhead variance? (3 points) 34. Prepare an income statement for internal management use based on March sales of 2.,900 units at a selling price of $30 per unit. Operating expenses totaled $16,790 for March. Complete the income statement to the NOL (4 points)

Explanation / Answer

31.

32.

33. Overhead:

Standard overhead cost= 1800*10= 18000

Actual cost= 12250+6150= 18400

Variance= 18000-18400= 400U

34.

Actual output a 3000 Standard units per unit of output b 1.5 Standard units for actual output c=a*b 4500 Standard quantity Standard rate Standard cost Actual quantity Actual rate Actual cost SQ SP SC AQ AP AC 4,500.00 3.00 13,500.00 5,000.00 3.2 16,000.00 [16000/5000] Total material cost/spending variance SQ*SP - AQ*AP 13500-16000 -2500 2500 U Material price variance AQ*(SP-AP) 5000*(3-3.2) -1000 1000 U Material quantity variance SP*(SQ-AQ) 3*(4500-5000) -1500 1500 U

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