Krueger Corporation in Washington, D.C., U.S., recently implemented a standard cost system. The company's cost accountant has gathered the following information needed to perform a variance analysis at the end of the month: Standard Cost Information Direct materials .... Quantity allowed per unit. Direct labor rate..... Hours allowed per unit .. Fixed overhead budgeted . Normal level of production .. Variable overhead application rate . Fixed overhead application rate ($12,000 _ 1,200 units). . . 10.00 per unit Total overhead application rate. $5 per pound .100 pounds per unit $20.00 per hour aus.2 hours per unit $12,000 per month 1,200 units $ 2.00 per unit .... $12.00 per unit Actual Cost Information Cost of materials purchased and used.... Pounds of materials purchased and used.. Cost of direct labor .... Hours of direct labor ... $468,000 .104,000 pounds $46,480 2,240 hours $2,352 .$12,850 ..1,000 units .... Cost of variable overhead Cost of fixed overhead . Volume of production Instructions 1. Compute the overhead spending variance. 2. Compute the overhead volume variance.
Krueger Corporation in Washington, D.C., U.S., recently implemented a standard cost system. The company's cost accountant has gathered the following information needed to perform a variance analysis at the end of the month: Standard Cost Information Direct materials .... Quantity allowed per unit. Direct labor rate..... Hours allowed per unit .. Fixed overhead budgeted . Normal level of production .. Variable overhead application rate . Fixed overhead application rate ($12,000 _ 1,200 units). . . 10.00 per unit Total overhead application rate. $5 per pound .100 pounds per unit $20.00 per hour aus.2 hours per unit $12,000 per month 1,200 units $ 2.00 per unit .... $12.00 per unit Actual Cost Information Cost of materials purchased and used.... Pounds of materials purchased and used.. Cost of direct labor .... Hours of direct labor ... $468,000 .104,000 pounds $46,480 2,240 hours $2,352 .$12,850 ..1,000 units .... Cost of variable overhead Cost of fixed overhead . Volume of production Instructions 1. Compute the overhead spending variance. 2. Compute the overhead volume variance.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter9: Evaluating Variances From Standard Costs
Section: Chapter Questions
Problem 3PA: Direct materials, direct labor, and factory overhead cost variance analysis Mackinaw Inc. processes...
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Concept explainers
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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