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Teaching Since: | May 2017 |
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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
PROBLEM 10–15 Comprehensive Variance Analysis [LO1, LO2, LO3] Helix Company produces several products in its factory, including a karate robe. The company uses a standard cost system to assist in the control of costs. According to the standards that have PROBLEM 10–14 Comprehensive Variance Analysis [LO1, LO2, LO3] Vitalite, Inc., produces a number of products, including a body-wrap kit. Standard variable costs relating to a single kit are given below: Standard Costs and Variances 453 During April, the factory worked only 760 direct labor-hours and produced 2,000 robes. The following actual costs were recorded during the month: Raw Material Standard Labor Time Product X342 Y561 Sintering Finishing Alpha8 . . . . . . . . . . . . 1.8 kilos 2.0 liters 0.20 hours 0.80 hours Zeta9 . . . . . . . . . . . . . 3.0 kilos 4.5 liters 0.35 hours 0.90 hours Information relating to materials purchased and materials used in production during May follows: Material Purchases Purchase Cost Standard Price Used in Production X342 . . . . . . . . . . . 14,000 kilos $51,800 $3.50 per kilo 8,500 kilos Y561 . . . . . . . . . . . 15,000 liters $19,500 $1.40 per liter 13,000 liters The following additional information is available: a. The company recognizes price variances when materials are purchased. b. The standard labor rate is $20.00 per hour in Sintering and $19.00 per hour in Finishing. c. During May, 1,200 direct labor-hours were worked in Sintering at a total labor cost of $27,000, and 2,850 direct labor-hours were worked in Finishing at a total labor cost of $59,850. d. Production during May was 1,500 Alpha8s and 2,000 Zeta9s. been set for the robes, the factory should work 780 direct labor-hours each month and produce 1,950 robes. The standard costs associated with this level of production are as follows: Total Per Unit of Product Direct materials . . . . . . . . . . . . . . . . . . . . . . . . $35,490 $18.20 Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . $7,020 3.60 Variable manufacturing overhead (based on direct labor-hours) . . . . . . . . . . . . . . . . . . . . $2,340 1.20 $23.00 Total Per Unit of Product Direct materials (6,000 yards) . . . . . . . . . . $36,000 $18.00 Direct labor . . . . . . . . . . . . . . . . . . . . . . . . $7,600 3.80 Variable manufacturing overhead . . . . . . . $3,800 1.90 $23.70 At standard, each robe should require 2.8 yards of material. All of the materials purchased during the month were used in production. Required: Compute the following variances for April: 1. The materials price and quantity variances. 2. The labor rate and efficiency variances. 3. The variable manufacturing overhead rate and efficiency variances.
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