Maggie Sound manufactures headphone cases. During July 2021, the company produced 108,000 cases and recorded the following cost data: Standard Cost Information Quantity Cost Direct Materials 3 parts $0.17 per part Direct Labor 0.03 hours $8.00 per hour Variable Manufacturing Overhead 0.03 hours $9.05 per hour Fixed Manufacturing Overhead 2,020 hours $17.20 per hour Actual Cost Information Quantity Cost Direct Materials 202,000 parts $0.24 per part Direct Labor 1,610 hours $8.30 per hour Variable Manufacturing Overhead $8,500 total cost Fixed Manufacturing Overhead $27,600 total cost (Round your answers to two decimal places when needed and use rounded answers for all future calculations). 1. Calculate the variable overhead cost and efficiency variances.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Maggie Sound manufactures headphone cases. During July 2021, the company produced 108,000 cases and recorded the following cost data:
| Standard Cost Information | Quantity | Cost |
|---|---|---|
| Direct Materials | 3 parts | $0.17 per part |
| Direct Labor | 0.03 hours | $8.00 per hour |
| Variable Manufacturing Overhead | 0.03 hours | $9.05 per hour |
| Fixed Manufacturing Overhead | 2,020 hours | $17.20 per hour |
| Actual Cost Information | Quantity | Cost |
|---|---|---|
| Direct Materials | 202,000 parts | $0.24 per part |
| Direct Labor | 1,610 hours | $8.30 per hour |
| Variable Manufacturing Overhead | $8,500 total cost | |
| Fixed Manufacturing Overhead | $27,600 total cost |
(Round your answers to two decimal places when needed and use rounded answers for all future calculations).
1. Calculate the variable overhead cost and efficiency variances.
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