QUESTION ONE (1) Fresh Company produces a well-known perfume. The standard manufacturing cost of the perfume is described by the following standard cost sheet: Direct materials: RM1.25 Liquids (5 oz. @ RM 0.25) Bottles (1 @ RM 0.05) RM 0.05 Direct Labor (0.25 @ RM 13.00) Variable overhead (0.25 @ RM 5) Fixed overhead (0.25 @ RM10.00) Standard cost per unit RM 3.25 RM 1.25 RM 2.50 RM 8.30 Management has decided to investigate only those variances that exceed the lesser of 10% of the standard cost for each category or RM 22,000. During the past quarter, a total of 300,000 four-ounce bottles of perfume was produced. Descriptions of actual activity for the quarter follow: a. A total of 1.2 million ounces of liquids was purchased, mixed, and processed. The price paid per ounce averaged RM 0.27 b. Exactly 280,000 bottles were used. The price paid for each bottle was RM 0.055. c. Direct labor hours totaled 50,000 with a total cost of RM 650,000 d. Variable overhead cost totaled RM 242,000 e. Fixed overhead cost was RM 600,000 Normal production volume for Fresh is 280,000 bottles per quarter. The standard overhead rates are computed using normal volume. Required 1. Compute price and usage variances for materials. 2. Compute the labor rate and labor efficiency variances. 3. Compute the fixed overhead spending and volume variance. 4. Compute the variable overhead spending and efficiency variances.
QUESTION ONE (1) Fresh Company produces a well-known perfume. The standard manufacturing cost of the perfume is described by the following standard cost sheet: Direct materials: RM1.25 Liquids (5 oz. @ RM 0.25) Bottles (1 @ RM 0.05) RM 0.05 Direct Labor (0.25 @ RM 13.00) Variable overhead (0.25 @ RM 5) Fixed overhead (0.25 @ RM10.00) Standard cost per unit RM 3.25 RM 1.25 RM 2.50 RM 8.30 Management has decided to investigate only those variances that exceed the lesser of 10% of the standard cost for each category or RM 22,000. During the past quarter, a total of 300,000 four-ounce bottles of perfume was produced. Descriptions of actual activity for the quarter follow: a. A total of 1.2 million ounces of liquids was purchased, mixed, and processed. The price paid per ounce averaged RM 0.27 b. Exactly 280,000 bottles were used. The price paid for each bottle was RM 0.055. c. Direct labor hours totaled 50,000 with a total cost of RM 650,000 d. Variable overhead cost totaled RM 242,000 e. Fixed overhead cost was RM 600,000 Normal production volume for Fresh is 280,000 bottles per quarter. The standard overhead rates are computed using normal volume. Required 1. Compute price and usage variances for materials. 2. Compute the labor rate and labor efficiency variances. 3. Compute the fixed overhead spending and volume variance. 4. Compute the variable overhead spending and efficiency variances.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter6: Process Costing
Section: Chapter Questions
Problem 59P: Equivalent Units, Unit Cost, Weighted Average Refer to the information for Alfombra Inc. on the...
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Transcribed Image Text:QUESTION ONE (1)
Fresh Company produces a well-known perfume. The standard manufacturing cost of the
perfume is described by the following standard cost sheet:
Direct materials:
Liquids (5 oz. @ RM 0.25)
Bottles (1 @ RM 0.05)
Direct Labor (0.25 @ RM 13.00)
Variable overhead (0.25 @ RM 5)
Fixed overhead (0.25 @ RM10.00)
Standard cost per unit
RM1.25
RM 0.05
RM 3.25
RM 1.25
RM 2.50
RM 8.30
Management has decided to investigate only those variances that exceed the lesser of 10% of
the standard cost for each category or RM 22,000. During the past quarter, a total of 300,000
four-ounce bottles of perfume was produced. Descriptions of actual activity for the quarter follow:
a. A total of 1.2 million ounces of liquids was purchased, mixed, and processed. The price
paid per ounce averaged RM 0.27
b. Exactly 280,000 bottles were used. The price paid for each bottle was RM 0.055.
C. Direct labor hours totaled 50,000 with a total cost of RM 650,000
d. Variable overhead cost totaled RM 242,000
e. Fixed overhead cost was RM 600,000
Normal production volume for Fresh is 280,000 bottles per quarter. The standard overhead rates
are computed using normal volume.
Required
1. Compute price and usage variances for materials.
2. Compute the labor rate and labor efficiency variances.
3. Compute the fixed overhead spending and volume variance.
4. Compute the variable overhead spending and efficiency variances.
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