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Sterling Company_standard cost system




Question;1.;The Sterling Company uses a standard cost system in which manufacturing;overhead costs are applied to the units of the company?s single product on the;basis of direct labor-hours (DLHs). The;standard cost card for the product follows;Standard Cost Card-per;unit of product;Direct materials, 4 yards at $3.50 per;yard $14;Direct labor, 1.5 DLHs at $8 per DLH 12;Variable overhead, 1.5 DLHs at $2 per;DLH 3;Fixed overhead, 1.5 DLHs at $6 per DLH 9;The following data pertain to last;year?s activities;-;The company manufactured 18,000 units of product during the year.;-;A total of 70,200 yards of;material was purchased during the year at a cost of $3.75 per yard. All of this material was used to manufacture;the 18,000 units.;-;The company worked 29,250 direct labor hours during the year at a cost;of $7.80 per hour.;-;The denominator activity level was 22,500 direct labor hours.;-;Budgeted fixed manufacturing overhead costs were $135,000 while actual;manufacturing overhead costs were $133,200.;-;Actual variable manufacturing overhead costs were $61,425.;Required (15;points);a. Compute the direct;materials price and quantity variances for the year.;b. Compute the direct labor;rate and efficiency variances for the year.;c. Compute the variable;overhead spending and efficiency variances for the year.;d. Compute the fixed overhead;budget and volume variances for the year.;e. Discuss some possible;reasons for the direct labor variances that you computed.


Paper#37914 | Written in 18-Jul-2015

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