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ANSWER ALL PARTS STEP BY STEP. DO NOT SKIP ANY PARTS Sammy Corp manufactures hel

ID: 2587733 • Letter: A

Question

ANSWER ALL PARTS STEP BY STEP. DO NOT SKIP ANY PARTS

Sammy Corp manufactures helmets. Sammy uses a standard costing system with the following standards:

STANDARD              Quantity                       Price

Direct Materials          1000 pounds               $12 per lb.

Direct Labor                2500 hours                  $20 per hour

Variable OH                    -------                      $30 per DLH

If you use a diagram, you must clearly label your answers, I will not try and find them for you

a.   The actual amount of direct materials purchased and used last period was 900 pounds. The average price paid was $15.00 per pound.   What is the overall Direct Material Variance ?

b. What is the Direct Materials Price Variance ?

c. What is the Direct Materials Quantity Variance

d.   The actual direct labor costs last period were $25.00 per hour. Sammy assumed that by paying the workers more than the standard, the workers’ higher efficiency would make up for the higher costs. Last period the Direct Labor Efficiency Variance was $14,000 (F). How many direct labor hours were actually used last period ?

e.   What is the Direct Labor Wage Variance ?

f. What is the overall Direct Labor Variance ?

g. What was the budgeted amount of Variable Overhead ?

h.   The actual variable overhead costs were $70,000. What was the variable overhead spending variance ?

Explanation / Answer

Material Variance Budgeted based on actual results Actual Price                                   12.00            15.00 Quanity                                   1,000                900 Total cost                                 12,000          13,500 Total Material Cost varaince                                   1,500 Material Price variance = (Standard price - Actual Price) * Actual usage = (12-15)*900          (2,700) Material quanitity variance = (Standard Quantity - Actual Quantity) * Budgered Price = (1000 - 900)*12 1200 Labor variance Budgeted based on actual results Actual Price                                   20.00            25.00 Hours                                   2,500 To be calculated Total cost                                 50,000 Total labor Cost varaince Labor quanitity variance = (Standard Quantity - Actual Quantity) * Budgered Price 14000 = (2500 - X)*20 =14000/20 = (2500 - X) 700 = (2500 - X) Actual Hours =2500-700 Actual Hours 1800 Labor Price variance = (Standard price - Actual Price) * Actual usage = (20 - 25)*1800 Labor wage variance          (9,000) Overall labor variance Budgeted based on actual results Actual Price                                   20.00            25.00 Hours                                   2,500            1,800 Total cost                                 50,000          45,000 Overall labor variance favorable                                   5,000 Overhead Variance Recovery rate Direct labor hours actual Total cost Variable Overhead            30.00 1800    54,000.00 Budgered Overheads          54,000 Actual overheads          70,000 Overhead cost Variance       (16,000)

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