Cajun Corporation Manufactures a Labor-Intensive Product

question 73

Essay

Cajun Corporation manufactures a labor-intensive product.The cost standards developed by Cajun appear below.Manufacturing overhead at Cajun is applied to production on the basis of standard direct labor-hours: The standards above were based on an expected annual volume of 8,000 units.The actual results for last year were as follows: Required:
Compute the following variances for Cajun.
a.Materials price variance.
b.Materials quantity variance.
c.Labor rate variance.
d.Variable overhead rate variance.
e.Variable overhead efficiency variance.
f.Fixed overhead budget variance.

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Definitions:

Lower Bound

The minimum level that an economic or financial variable can achieve, often used in the context of interest rates.

Fixed Price

A fixed price is a set cost for goods or services that does not change in response to market fluctuations or differing quantities purchased.

Common Stock

Type of equity security that represents ownership in a corporation, with rights to vote on corporate matters and share in dividends.

Real Goods

Real goods refer to physical, tangible products and commodities that can be touched, used, and traded, in contrast to services or digital products.