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Kim Company produces a well-known cologne. The standard manufacturing cost of the cologne is described by the following standard cost sheet: Direct Materials: Liquids (5 oz. @$0.65) Bottles (2 @$1.20) Direct Labor (0.30 hr. @$9.00) Variable Overhead (0.30hr. @$4.50) $1.35 $3.25 $2.40 $2.70 Fixed Overhead (0.30 hr. @$2.60) $0.78 Standard cost per unit $10.48 During the past quarter, 200,000 five-ounce bottles of cologne were produced. Descriptions of actual activity for the quarter follow: a. A total of 1 million ounces of liquids was purchased, mixed, and processed. Evaporation was not as high as expected; hence 60,000 ounces of liquids remain as inventories. The price paid per ounce averaged $0.50. b. Exactly 300,000 bottles were used. The price paid for each bottle was $0.60 c. Direct labor hours used was 35,000 hours @$280,000 d. Actual Variable Overhead totaled $210,000 e. Actual Fixed Overhead totaled $122,500 Normal production volume for Kim Company is 350,000 bottles per quarter. The standard overhead rates are computed by using normal volume. All overhead costs are incurred uniformly throughout the year. Required: 1. Compute the total materials variance, and break it into price and usage variances. 2. Compute the total labor variance, and break it into rate and efficiency variances. 3. Compute the total variable overhead variance, and break it into spending and efficiency variances. 4. Compute the total fixed overhead variance, and break it into spending and volume variances

Kim Company produces a well-known cologne. The standard manufacturing cost of the cologne is described by the following standard cost sheet: Direct Materials: Liquids (5 oz. @$0.65) Bottles (2 @$1.20) Direct Labor (0.30 hr. @$9.00) Variable Overhead (0.30hr. @$4.50) $1.35 $3.25 $2.40 $2.70 Fixed Overhead (0.30 hr. @$2.60) $0.78 Standard cost per unit $10.48 During the past quarter, 200,000 five-ounce bottles of cologne were produced. Descriptions of actual activity for the quarter follow: a. A total of 1 million ounces of liquids was purchased, mixed, and processed. Evaporation was not as high as expected; hence 60,000 ounces of liquids remain as inventories. The price paid per ounce averaged $0.50. b. Exactly 300,000 bottles were used. The price paid for each bottle was $0.60 c. Direct labor hours used was 35,000 hours @$280,000 d. Actual Variable Overhead totaled $210,000 e. Actual Fixed Overhead totaled $122,500 Normal production volume for Kim Company is 350,000 bottles per quarter. The standard overhead rates are computed by using normal volume. All overhead costs are incurred uniformly throughout the year. Required: 1. Compute the total materials variance, and break it into price and usage variances. 2. Compute the total labor variance, and break it into rate and efficiency variances. 3. Compute the total variable overhead variance, and break it into spending and efficiency variances. 4. Compute the total fixed overhead variance, and break it into spending and volume variances

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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PROBLEM 8 - 4 Kim Company produces a well-known cologne. The standard manufacturing cost of the cologne is described by the following standard cost sheet: Direct Materials: Liquids (5 oz. @$0.65) $3.25 Bottles (2 @$1.20) Direct Labor (0.30 hr. @$9.00) Variable Overhead (0.30hr. @$4.50) $1.35 Fixed Overhead (0.30 hr. @$2.60) Standard cost per unit $2.40 $2.70 $0.78 $10.48 During the past quarter, 200,000 five-ounce bottles of cologne were produced. Descriptions of actual activity for the quarter follow: a. A total of 1 million ounces of liquids was purchased, mixed, and processed. Evaporation was not as high as expected; hence 60,000 ounces of liquids remain as inventories. The price paid per ounce averaged $0.50. b. Exactly 300,000 bottles were used. The price paid for each bottle was $0.60 c. Direct labor hours used was 35,000 hours @$280,000 d. Actual Variable Overhead totaled $210,000 e. Actual Fixed Overhead totaled $122,500 Normal production volume for Kim Company is 350,000 bottles per quarter. The standard overhead rates are computed by using normal volume. All overhead costs are incurred uniformly throughout the year. Required: 1. Compute the total materials variance, and break it into price and usage variances. 2. Compute the total labor variance, and break it into rate and efficiency variances. 3. Compute the total variable overhead variance, and break it into spending and efficiency variances. 4. Compute the total fixed overhead variance, and break it into spending and volume variances
Transcribed Image Text:PROBLEM 8 - 4 Kim Company produces a well-known cologne. The standard manufacturing cost of the cologne is described by the following standard cost sheet: Direct Materials: Liquids (5 oz. @$0.65) $3.25 Bottles (2 @$1.20) Direct Labor (0.30 hr. @$9.00) Variable Overhead (0.30hr. @$4.50) $1.35 Fixed Overhead (0.30 hr. @$2.60) Standard cost per unit $2.40 $2.70 $0.78 $10.48 During the past quarter, 200,000 five-ounce bottles of cologne were produced. Descriptions of actual activity for the quarter follow: a. A total of 1 million ounces of liquids was purchased, mixed, and processed. Evaporation was not as high as expected; hence 60,000 ounces of liquids remain as inventories. The price paid per ounce averaged $0.50. b. Exactly 300,000 bottles were used. The price paid for each bottle was $0.60 c. Direct labor hours used was 35,000 hours @$280,000 d. Actual Variable Overhead totaled $210,000 e. Actual Fixed Overhead totaled $122,500 Normal production volume for Kim Company is 350,000 bottles per quarter. The standard overhead rates are computed by using normal volume. All overhead costs are incurred uniformly throughout the year. Required: 1. Compute the total materials variance, and break it into price and usage variances. 2. Compute the total labor variance, and break it into rate and efficiency variances. 3. Compute the total variable overhead variance, and break it into spending and efficiency variances. 4. Compute the total fixed overhead variance, and break it into spending and volume variances
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