Krane Company Has a Standard Costing System and Keeps All

question 74

Essay

Krane Company has a standard costing system and keeps all its costs up to date.The company's main product is beach towels which are made in a single department.The standard variable costs for one beach towel (unit)are as follows:
$\begin{array}{lr}\text { Direct materials ( } 3 \text { yards at } \$ 1.00 \text { per yard) } & \$ 3.00 \\\text { Direct labor ( } 1 / 2 \text { hour at } \$ 9.00 \text { per hour) } & 4.50 \\\text { Variable overhead ( } 1 / 2 \text { hour } @ \$ 5.00 \text { per direct labor hour) } & 2.50 \\\text { Standard variable cost per unit } & \$ 10.00\end{array}$
The company's normal capacity is 10,000 direct labor hours.Its budgeted fixed overhead costs for the year were $24,000.During the year,it produced and sold 22,000 beach towels and it purchased 66,250 yards of direct materials; the purchase cost was $0.99 per yard.The average labor rate was $9.10 per hour,and 10,900 direct labor hours were worked.The company's actual variable overhead costs for the year were $55,100,and its fixed costs were $24,500.
Using the data given,compute the following using formulas or diagram form:
1.Direct materials cost variances:
a.Direct materials price variance
b.Direct materials quantity variance
c.Total direct materials cost variance
2.Direct labor cost variances:
a.Direct labor rate variance
b.Direct labor efficiency variance
c.Total direct labor cost variance
3.Variable overhead variances:
a.Variable overhead spending variance
b.Variable overhead efficiency variance
c.Total variable overhead variance
4.Fixed overhead variances:
a.Fixed overhead budget variance
b.Fixed overhead volume variance
c.Total fixed overhead variance

Recognize the role of government in regulating natural monopolies and its effects on firm incentive and efficiency.

Analyze government policies on mergers and acquisitions to prevent market dominance and maintain competition.

Understand the complementary relationship between antitrust laws and innovation, specifically in industries requiring substantial capital.

Identify the entities authorized to file antitrust charges and understand the exclusions within this context.

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Definitions:

Production Difficulties

Challenges or issues encountered in the manufacturing process that can lead to delays, increased costs, or reductions in product quality.

Standards

Performance goals, often relating to how much a product should cost.

Bonuses

Additional financial rewards given to employees as an incentive or reward for their performance.

Standard Costs

Predetermined costs serving as a benchmark for evaluating the actual cost performance of operations.