You have recently accepted a position with Vitex, Inc., the manufacturer of a po

Question

You have recently accepted a position with Vitex, Inc., the manufacturer of a popular consumer product. During your first week on the job, the vice president has been favorably impressed with your work. She has been so impressed, in fact, that yesterday she called you into her office and asked you to attend the executive committee meeting this morning for the purpose of leading a discussion on the variances reported for last period. Anxious to favorably impress the executive committee, you took the variances and supporting data home last night to study.

    

On your way to work this morning, the papers were laying on the seat of your new, red convertible. As you were crossing a bridge on the highway, a sudden gust of wind caught the papers and blew them over the edge of the bridge and into the stream below. You managed to retrieve only one page, which contains the following information:

Variances Reported

*Applied to Work in Process during the period.

† Entry obliterated.

You recall that manufacturing overhead cost is applied to production on the basis of direct labor-hours and that all of the materials purchased during the period were used in production. Work in process inventories are insignificant and can be ignored.

It is now 8:30 a.m. The executive committee meeting starts in just one hour; you realize that to avoid looking like a bungling fool you must somehow generate the necessary “backup” data for the variances before the meeting begins. Without backup data it will be impossible to lead the discussion or answer any questions..

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?

Standard Cost Card Direct materials, 2.20 pounds at $16.90 per pound $ 37.18 Direct labor, 1.00 direct labor-hours at $15.50 per direct labor-hour $ 15.50 Variable manufacturing overhead, 1.00 direct labor-hours at $9.30 per direct labor-hour $ 9.30

Explanation / Answer

Standard material used / Standard material per unit

669240/ 37.18

Units produced last period = 18000 units

Std qty of DM required per unit = 2.20 pounds

Standard Quantity of direct material required to produce = 18000 * 2.20

= 39600 pounds

DM Quantity Variance = (AQ-SQ)* SP

33800 = (AQ-39600) 16.90

Actual direct material purchased and used in production=

41600 pounds

DM price Variance

= (AP-SP) * AQ

12064(F) = (AP-16.90) 41600

-12064= 41600 (AP-16.90)

DL Efficiency Variance = (AH*SR)- Standard Cost of Direct Labour

15500= (AH*15.50) - 279000

Direct Labor Rate Variance = (AR-SR) * AH

3800(U)= (AR- 15.50) 19000

Variable Price Variance = (AR-SR) AH

5000(F)= (AR-9.30) 19000

= AR = $ 9.04

actual variable manufacturing overhead cost = AH * AR

= 19000 * $ 9.04

S.no Particulars Calculation Answer 1 Units produced last period

Standard material used / Standard material per unit

669240/ 37.18

18000 units 2 Pounds of direct material purchased and used in production

Units produced last period = 18000 units

Std qty of DM required per unit = 2.20 pounds

Standard Quantity of direct material required to produce = 18000 * 2.20

= 39600 pounds

DM Quantity Variance = (AQ-SQ)* SP

33800 = (AQ-39600) 16.90

Actual direct material purchased and used in production=

41600 pounds

3 the actual cost per pound of material

DM price Variance

= (AP-SP) * AQ

12064(F) = (AP-16.90) 41600

-12064= 41600 (AP-16.90)

the actual cost per pound of material = $16.61 4 Actual direct labor-hours worked during the period

DL Efficiency Variance = (AH*SR)- Standard Cost of Direct Labour

15500= (AH*15.50) - 279000

Actual direct labor-hours worked during the period = 19000 hours 5 the actual rate paid per direct labor-hour

Direct Labor Rate Variance = (AR-SR) * AH

3800(U)= (AR- 15.50) 19000

actual rate paid per direct labor-hour =  15.70 hrs 6 actual variable manufacturing overhead cost was incurred during the period

Variable Price Variance = (AR-SR) AH

5000(F)= (AR-9.30) 19000

= AR = $ 9.04

actual variable manufacturing overhead cost = AH * AR

= 19000 * $ 9.04

actual variable manufacturing overhead cost was incurred during the period = $171760

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.