The Following Information Is for the Standard and Actual Costs

question 101

Essay

The following information is for the standard and actual costs for the Happy Corporation.
Standard Costs:
Budgeted units of production - 16,000 (80% of 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% 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
Actual variable overhead - $1,000,000
Determine: (a) the quantity variance, price variance, and total direct materials cost variance; (b) the time variance, rate variance, and total direct labor cost variance; and (c) the volume variance, controllable variance, and total factory overhead cost variance.

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Definitions:

Molding Department

A specialized department within a manufacturing facility where the molding of materials into desired shapes takes place.

Weighted Average Method

A cost accounting method that calculates the cost of goods sold and ending inventory based on the weighted average cost of all units available for sale.

Equivalent Unit

An equivalent unit is a measure used in cost accounting to express the amount of work done on incomplete products in terms of fully completed units.

Painting Department

A specific section within a manufacturing facility dedicated to the painting of products, often considered in costing for departmental overhead allocation.