E23-19 Calculating materials and labor variances
Great Fender, which uses a standard cost accounting system, manufactured 20,000 boat fenders during 2014, using 144,000 square feet of extruded vinyl purchased at $1.05 per square foot. Production required 420 direct labor hours that cost $13.50 per hour. The direct materials standard was 7 square feet of vinyl per fender, at a standard cost of $1.10 per square foot. The labor standard was 0.025 direct labor hour per fender, at a standard cost of $12.50 per hour.
Compute the cost and efficiency variances for direct materials and direct labor.
E23-20 Computing overhead variances
Review the data from Great Fender given in Exercise E23-19. Consider the following additional information
Static budget variable overhead $ 5,500
Static budget fixed overhead $ 22,000
Static budget direct labor hours 550 hours
Static budget number of units 22,000 units
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Great Fender allocates manufacturing overhead to production based on standard direct labor hours. Great Fender reported the following actual results for 2014:
actual variable overhead, $4,950; actual fixed overhead, $23,000.
Requirements
1. Compute the overhead variances for the year: variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance, and fixed overhead volume variance.
2. Explain why the variances are favorable or unfavorable
TUTORIAL PREVIEW
Req. 1
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The organized materials and labor data is as follows:
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Direct materials:
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Actual price per foot
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$1.05
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Standard price per foot
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$1.10
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File name E23-19 E23-20 Great Fender.xls File type: xls PRICE: $15
