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Direct materials (4.0 pounds @ $4.00 per pound) Direct labor (1.8 hours @ $13.00 per hour) Overhead (1.8 hours @ $18.50 per hour) Standard cost per unit $ 16.00 23.40 33.30 $ 72.70 The standard overhead rate ($18.50 per direct labor hour) is based on a predicted activity level of 75% of the factory's capacity of 20,000 units per month. Following are the company's budgeted overhead costs per month at the 75% capacity level. Overhead Budget (75% Capacity) Variable overhead costs Indirect materials Indirect labor $ 15,000 75,000 Power 15,000 Maintenance 30,000 Total variable overhead costs 135,000 Fixed overhead costs 25,000 71,000 17,000 Supervisory salaries 251,500 364,500 Depreciation-Building Depreciation-Machinery Taxes and insurance Total fixed overhead costs Total overhead costs $ 499,500 The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (61,000 pounds @ $4.20 per pound) Direct labor (22,000 hours @ $13.10 per hour) Overhead costs Indirect materials Indirect labor Power Maintenance Depreciation-Building Depreciation-Machinery Taxes and insurance Supervisory salaries Total costs $ 256,200 288,200 $ 41,900 176,200 17,250 34,500 25,000 95,850 15,300 251,500 657,500 $ 1,201,900 Compute the direct labor variance, including its rate and efficiency variances. te: Indicate the effect of each variance by selecting favorable, unfavorable, or no variance. Round "Rate per hour" answers to o decimal places.

Direct materials (4.0 pounds @ $4.00 per pound) Direct labor (1.8 hours @ $13.00 per hour) Overhead (1.8 hours @ $18.50 per hour) Standard cost per unit $ 16.00 23.40 33.30 $ 72.70 The standard overhead rate ($18.50 per direct labor hour) is based on a predicted activity level of 75% of the factory's capacity of 20,000 units per month. Following are the company's budgeted overhead costs per month at the 75% capacity level. Overhead Budget (75% Capacity) Variable overhead costs Indirect materials Indirect labor $ 15,000 75,000 Power 15,000 Maintenance 30,000 Total variable overhead costs 135,000 Fixed overhead costs 25,000 71,000 17,000 Supervisory salaries 251,500 364,500 Depreciation-Building Depreciation-Machinery Taxes and insurance Total fixed overhead costs Total overhead costs $ 499,500 The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (61,000 pounds @ $4.20 per pound) Direct labor (22,000 hours @ $13.10 per hour) Overhead costs Indirect materials Indirect labor Power Maintenance Depreciation-Building Depreciation-Machinery Taxes and insurance Supervisory salaries Total costs $ 256,200 288,200 $ 41,900 176,200 17,250 34,500 25,000 95,850 15,300 251,500 657,500 $ 1,201,900 Compute the direct labor variance, including its rate and efficiency variances. te: Indicate the effect of each variance by selecting favorable, unfavorable, or no variance. Round "Rate per hour" answers to o decimal places.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Direct materials (4.0 pounds @ $4.00 per pound) Direct labor (1.8 hours @ $13.00 per hour) Overhead (1.8 hours @ $18.50 per hour) Standard cost per unit $ 16.00 23.40 33.30 $ 72.70 The standard overhead rate ($18.50 per direct labor hour) is based on a predicted activity level of 75% of the factory's capacity of 20,000 units per month. Following are the company's budgeted overhead costs per month at the 75% capacity level. Overhead Budget (75% Capacity) Variable overhead costs Indirect materials Indirect labor $ 15,000 75,000 Power 15,000 Maintenance 30,000 Total variable overhead costs 135,000 Fixed overhead costs Depreciation-Building Depreciation-Machinery 25,000 71,000 Taxes and insurance Supervisory salaries 17,000 251,500 364,500 $ 499,500 Total fixed overhead costs Total overhead costs The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (61,000 pounds @ $4.20 per pound) Direct labor (22,000 hours @ $13.10 per hour) Overhead costs Indirect materials Indirect labor Power Maintenance Depreciation-Building Depreciation-Machinery Taxes and insurance Supervisory salaries Total costs $ 256,200 288,200 $ 41,900 176,200 17,250 34,500 25,000 95,850 15,300 251,500 657,500 $ 1,201,900 Compute the direct labor variance, including its rate and efficiency variances. ote: Indicate the effect of each variance by selecting favorable, unfavorable, or no variance. Round "Rate per hour" answers to vo decimal places.
Transcribed Image Text:Direct materials (4.0 pounds @ $4.00 per pound) Direct labor (1.8 hours @ $13.00 per hour) Overhead (1.8 hours @ $18.50 per hour) Standard cost per unit $ 16.00 23.40 33.30 $ 72.70 The standard overhead rate ($18.50 per direct labor hour) is based on a predicted activity level of 75% of the factory's capacity of 20,000 units per month. Following are the company's budgeted overhead costs per month at the 75% capacity level. Overhead Budget (75% Capacity) Variable overhead costs Indirect materials Indirect labor $ 15,000 75,000 Power 15,000 Maintenance 30,000 Total variable overhead costs 135,000 Fixed overhead costs Depreciation-Building Depreciation-Machinery 25,000 71,000 Taxes and insurance Supervisory salaries 17,000 251,500 364,500 $ 499,500 Total fixed overhead costs Total overhead costs The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (61,000 pounds @ $4.20 per pound) Direct labor (22,000 hours @ $13.10 per hour) Overhead costs Indirect materials Indirect labor Power Maintenance Depreciation-Building Depreciation-Machinery Taxes and insurance Supervisory salaries Total costs $ 256,200 288,200 $ 41,900 176,200 17,250 34,500 25,000 95,850 15,300 251,500 657,500 $ 1,201,900 Compute the direct labor variance, including its rate and efficiency variances. ote: Indicate the effect of each variance by selecting favorable, unfavorable, or no variance. Round "Rate per hour" answers to vo decimal places.
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