Reference no: EM131797929
Problem 1 - Slyman Manufacturing Inc. has developed the following standards for one of its products. The materials are not substitutable.
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Material 1
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5 yards
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$6/yard
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$30
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Material 2
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6 pieces
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$5/piece
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$30
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Direct labor
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3 hours
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$24/hour
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$72
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Total variable cost per unit
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|
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$132
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The records for March showed the following actual results:
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Material 1
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Purchases
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10,000 yards for $58,000
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|
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Used
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9,500 yards
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Material 2
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Purchased
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15,000 pieces for $78,750
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|
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Used
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12,100 pieces
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Direct labor
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5,900 hours for $147,500
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Units produced
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2,000 units
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Required:
(1) Calculate the following variances
(a) Material purchase price variance for material 1
(b) Material quantity variance for material 1
(c) Material purchase price variance for material 2
(d) Material quantity variance for material 2
(e) Labor rate variance
(f) Labor efficiency variance
2) Give at least one possible cause for each of the following variances:
(a) material 2 quantity variance
(b) labor rate variance
(c) labor efficiency variance
Problem 2 - Atherton Company uses a four-way analysis for overhead. The following information is available for August for overhead:
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Budgeted units of output
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4,500 for August
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Budgeted fixed overhead
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$33,750/month
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Budgeted variable overhead
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$6/DLH
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Budgeted direct labor hours
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3 hours/unit
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Fixed overhead incurred
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$35,000
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Direct labor hours used
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14,000
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Variable overhead incurred
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$82,500
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Actual units produced
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4,400
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The company closes all variances to cost of goods sold.
Required:
(1) Compute the four variances for a four-way analysis.
(2) Prepare all necessary journal entries to close overhead into cost of goods sold. Keep the entries for fixed and variable items separate.