The Following Information Is for the Standard and Actual Costs

question 157

Essay

The following information is for the standard and actual costs for the Happy Corporation:
Standard Costs:
Budgeted units of production - 16,000 [80% or normal capacity]
Standard labor hours per unit - 4
Standard labor rate - $26 per hour
Standard material per unit - 8 lbs.
Standard material cost - $12 per pound
Standard variable overhead rate - $15 per labor hour
Budgeted fixed overhead - $640,000
Fixed overhead rate is based on budgeted labor hours at 80% or normal capacity.
Actual Cost:
Actual production - 16,500 units
Actual material purchased and used - 130,000 pounds
Actual total material cost - $1,600,000
Actual labor - 65,000 hours
Actual total labor costs - $1,700,000
Actual variable overhead - $1,000,000
Actual fixed overhead - $640,000
Determine: a the direct materials quantity variance, price variance, and total cost variance; b the direct labor time variance, rate variance, and total cost variance; and c the factory overhead volume variance, controllable variance, and total factory overhead cost variance.Note: If following text formulas, do not round interim calculations.

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Definitions:

Gross Profit

The difference between total revenue and the cost of goods sold, indicating the fundamental profitability of a company's core activities.

Rising Prices

A situation in which the general level of prices for goods and services in an economy increases over a period of time.

Market Cost

The current price at which goods, assets, or services can be bought or sold in the marketplace.

Perpetual Inventory System

An inventory accounting method where updates are made continuously to record sales and purchases in real time.