Reference no: EM131882611

Question 1 - Gelato Supremo is a popular neighborhood gelato shop. The company has provided the following data concerning its operations:

While gelato is sold by the cone or cup, the shop measures its activity in terms of the total number of liters of gelato sold. For example, wages should be $4,900 plus $1.10 per liter of gelato sold, and the actual wages for July were $11,160. Gelato Supremo expected to sell 5,300 liters in July, but actually sold 5,200 liters.

Prepare a report showing Gelato Supremo revenue and spending variances for July.

Question 2 - Triway Packaging Corporation manufactures and sells a wide variety of packaging products. Performance reports are prepared monthly for each department. The planning budget and flexible budget for the Production Department are based on the following formulas, where q is the number of direct labor-hours worked in a month:

The actual costs incurred in November in the Production Department are listed below:

1. The company had budgeted for an activity level of 4,300 labor-hours in November. Prepare the Production Department's planning budget for the month.

2. The company actually worked 4,100 labor-hours in November. Prepare the Production Department's flexible budget for the month.

3. Calculate the spending variances for all expense items.

Question 3 - Topper Toys has developed a new toy called the Brainbuster. The company has a standard cost system to help control costs and has established the following standards for the Brainbuster toy:

Direct materials: 7 diodes per toy at $0.32 per diode

Direct labor: 1.2 hours per toy at $6.90 per hour

During August, the company produced 5,400 Brainbuster toys. Production data on the toy for August follow:

Direct materials: 80,000 diodes were purchased at a cost of $0.29 per diode. 32,750 of these diodes were still in inventory at the end of the month.

Direct labor: 7,080 direct labor-hours were worked at a cost of $53,100.

1. Compute the following variances for August:

a. Direct materials quantity and price variances.

b. Direct labor efficiency and rate variances.

Question 4 - Order Up, Inc., provides order fulfillment services for dot.com merchants. The company maintains warehouses that stock items carried by its dot.com clients. When a client receives an order from a customer, the order is forwarded to Order Up, which pulls the item from storage, packs it, and ships it to the customer. The company uses a predetermined variable overhead rate based on direct labor-hours.

In the most recent month, 120,000 items were shipped to customers using 4,700 direct labor-hours. The company incurred a total of $13,865 in variable overhead costs.

According to the company's standards, 0.04 direct labor-hours are required to fulfill an order for one item and the variable overhead rate is $3.00 per direct labor-hour.

1a. According to the standards, what variable overhead cost should have been incurred to fill the orders for the 120,000 items?

1b. How much does this differ from the actual variable overhead cost?

2. Break down the difference computed in (1) above into a variable overhead efficiency variance and a variable overhead rate variance.