Home / Questions / PROBLEM 10A 12 Comprehensive Standard Cost Variances LO1 LO2 LO3 LO4 Dresser Company uses...
PROBLEM 10A–12 Comprehensive Standard Cost Variances [LO1, LO2, LO3, LO4]
Dresser Company uses a standard cost system and sets predetermined overhead rates on the basis of direct labor-hours. The following data are taken from the company’s budget for the current year:
Denominator activity (direct labor-hours) . . . . . . . . . . . . . . . . . . . . . . . . . |
9,000 |
Variable manufacturing overhead cost at 9,000 direct labor-hours . . . . . . |
$34,200 |
Fixed manufacturing overhead cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
$63,000 |
The standard cost card for the company’s only product is given below:
Direct materials, 4 pounds at $2.60 per pound . . . . . . . . . . . . . . . . . . |
$10.40 |
Direct labor, 2 direct labor-hours at $9.00 per hour . . . . . . . . . . . . . . |
18.00 |
Overhead, 2 direct labor-hours at $10.80 per hour . . . . . . . . . . . . . . . |
21.60 |
Standard cost per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
$50.00 |
During the year, the company produced 4,800 units of product and incurred the following costs:
Materials purchased, 30,000 pounds at $2.50 per pound . . . . . . |
$75,000 |
Materials used in production (in pounds) . . . . . . . . . . . . . . . . . . . |
20,000 |
Direct labor cost incurred, 10,000 direct labor-hours at |
|
$8.60 per direct labor-hour . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
$86,000 |
Variable manufacturing overhead cost incurred . . . . . . . . . . . . . . |
$35,900 |
Fixed manufacturing overhead cost incurred . . . . . . . . . . . . . . . . |
$64,800 |
Required:
1. Redo the standard cost card in a clearer, more usable format by detailing the variable and fixed overhead cost elements.
2. Prepare an analysis of the variances for materials and labor for the year.
3. Prepare an analysis of the variances for variable and fixed overhead for the year.
4. What effect, if any, does the choice of a denominator activity level have on standard unit costs? Is the volume variance a controllable variance from a spending point of view? Explain.
Jun 28 2020 View more View Less
Gardner-Denver is the largest manufacturer of ratchet wrenches and their replacement parts in the United States. Gardner-Denver had two different lists of prices for its ...
Aug 01 2021Consider a game of “ladder climbing.” There are 5 levels in the game, level 1 is the lowest (bottom) and level 5 is the highest (top). A player starts at the bottom. Each...
Aug 02 2020Suppose the interest rate is five percent, the expected growth rate of the firm is two percent, and the firm is expected to continue forever. If current profits are $1,00...
Nov 20 2019Identify the reasons a low voltage control circuit is more desirable than a line voltage control circuit.
Jun 11 2021he physical sciences have adopted the principles of operationalism as put forward by William Percy Bridgman, recipient of the 1946 Nobel Prize in Physics, in his book The...
Jun 01 2020The probabilities that a batch of 4 computers will contain 0, 1, 2, 3, and 4 defective computers are 0.4305, 0.4039, 0.1421, 0.0222, and 0.0013, respectively. Find the va...
Aug 01 2020What other workplace diversity initiatives discussed in Chapter 4 (besides employee resource groups) might be appropriate for an organization like Starbucks? >
May 09 2020There is an increase in the real interest rate, due to contractionary monetary policy. Mark only one oval. 0000 Increase in AD Decrease in AD Increase in SRAS (shift righ...
Jun 05 2021If trade is beneficial for a country, it must be good for everyone in the country. True or False?
Jun 12 2021What products would you expect from oxymercuration-demercuration of the following alkenes?(a) CH3CH2CH2CH=CH2 1-Pentene(b) 2-Methyl-2-pentene
Jun 14 2021