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Chapter 23: Q18RQ (page 1305)
List the eight product variances and the manager most likely responsible for each.
The purchasing manager looks after the materials cost and the labor cost by the human resource manager. The production manager looks after efficiency variances and variable and fixed overhead variances.
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00Question:Mason Fender is a competitor of Matthews Fender from Exercise E2319. Mason Fender also uses a standard cost system and provides the following information:
Static budget variable overhead \( 2,300
Static budget fixed overhead \) 23,000
Static budget direct labor hours 575 hours
Static budget number of units 23,000 units
Standard direct labor hours 0.025 hours per fender
Mason Fender allocates manufacturing overhead to production based on standard direct labor hours. Mason Fender reported the following actual results for 2018: actual number of fenders produced, 20,000; actual variable overhead, \(5,350; actual fixed overhead, \)26,000; actual direct labor hours, 460.
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.
Question:Mills, Inc. is a competitor of Murry, Inc. from Exercise E2318. Mills also uses a standard cost system and provides the following information:
Static budget variable overhead \( 1,200
Static budget fixed overhead \) 1,600
Static budget direct labor hours 800 hours
Static budget number of units 400 units
Standard direct labor hours 2 hours per unit
Mills allocates manufacturing overhead to production based on standard direct labor hours. Mills reported the following actual results for 2018: actual number of units produced, 1,000; actual variable overhead, \(4,000; actual fixed overhead, \)3,100; actual direct labor hours, 1,600.
Requirements
1. Compute the variable overhead cost and efficiency variances and fixed overhead cost and volume variances.
2. Explain why the variances are favorable or unfavorable
Computing overhead variances
Refer to the Morgan, Inc. data in Short Exercise S239. Last month, Morgan reported the following actual results: actual variable overhead, \(10,800; actual fixed overhead, \)2,770; actual production of 7,000 units at 0.20 direct labor hours per unit. The standard direct labor time is 0.25 direct labor hours per unit (1,300 static direct labor hours / 5,200 static units).
Requirements
1. Compute the overhead variances for the month: 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.
Question:What is a standard cost system?
Question:Garland Company expects to sell 600 wreaths in December 2018, but wants to plan for 100 more and 100 less than expected. The wreaths sell for \(5.00 each and have variable costs of \)2.00 each. Fixed costs are expected to be $500 for the month. Prepare a flexible budget for 500, 600, and 700 wreaths.
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