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##### Materials, labor, and overhead variances, and over...

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Materials, labor, and overhead variances, and overhead variance report 21-6A Kudos Company has set the following standard costs per unit for the product it manaufactures. Direct materials (10 lbs @ \$3 per lb.) \$30.00 Direct labor (4 hrs @ \$ per hr.) 24.00 Overhead (4 hrs @ \$2.50 per hr.) 10.00 Total standard cost \$64.00 The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 10,000 units per month. The following flexible budget information is available: Production in units 7,000 8,000 9,000 Standard direct labor hours 28,000 32,000 36,000 Budgeted overhead Variable overhead costs Indirect materials \$8,750 \$10,000 \$11,250 Indirect labor 14,000 16,000 18,000 Power 3,500 4,000 4,500 Maintenance 1,750 2,000 2,250 Total variable costs 28,000 32,000 36,000 Fixed overhead costs Rent of factory building 12,000 12,000 12,000 Depreciation - machinery 20,000 20,000 20,000 Supervisory salaries 16,000 16,000 16,000 Total fixed costs 48,000 48,000 48,000 Total overhead costs \$76,000 \$80,000 \$84,000 During May, the company operated at 90% of capactiy and produced 9,000 units, incurring the following actual costs Direct materials (92,000 lbs @ \$2.95 per lb) \$271,400 Direct labor (37,600 hrs @ \$6.05 per hr) 227,480 Overhead costs Indirect materials \$10,000 Indirect labor 16,000 Power 4,500 Maintenance 3,000 Rent of factory building 12,000 Depreciation - machinery 19,200 Supervisory salaries 17,000 81,700 Total costs \$580,580 Required 1. Compute the direct marterials variance, including its prince and quantity variances 2. Computer the direct labor variance, including its rate and efficiency variances 3. Computer these variances (a) variable overhead spending and efficiency, (b) fixed overhead spending and volume, and C. total overhead controllable. 4. Prepare a detailed overhead variance report that shows the variances for indivdiual items of overhead.

Paper#4720 | Written in 18-Jul-2015

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