Required1. The CEO asked you to recalculate the direct material purchase variance and the fixedoverhead volume variance, because the controller had made a mistake in calculating thevariances for November 2020. Provide the calculation and state whether the controller hadcalculated the variances correctly.2. Assume that the rest of the variances had been calculated and remarked correctly. For eachof the variances on the list above (including your correction for requirement no.1, if any):a. Provide a brief explanation of the causes of varianceb. State who is responsible for the variance3. Based on your analysis from the requirement (2) above, do you think the cost managementhas been applied successfully in the company?4. The CEO also asked you to calculate the following variances:a. Contribution margin varianceb. Contribution margin volume variancec. Market share varianced. Market size variance A Company establishes the following standards for the costs of one unit of its product. The standardproduction overhead costs per unit are bascd on direct-labor hours. Calculation for standard per unitcost is as follows:Std CostStd Qty3.00 kg| Direct MaterialDirect LaborVariable OverheadFixed Overhead*|Total*based on practical capacity of 20,000 direct-labor hour per monthStd Price/Rate$ 8.25 per kg$ 10.00 per hour$ 10.00 per hour$ 7.50 per hour24.75$20.002.00 hour$20.002.00 hour15.002.00 hour79.75During December 2020, the Company purchased 30,000 kg of direct material at a total cost of$246,000. The total wages for December were $260,000, 75% of which were for direct labor. TheCompany manufactured 9,500 units of product during December 2020, using 28,400 kg of the directmaterial purchased in December and 18,900 direct-labor hours. Actual variable and fixed overheadcost were $200,000 and $150,000, respectively. The scheduled production for the month was 10,000units.Results from sales of the product is as follows:BudgetedActualUnits Sold (in units)9,000$ 990,000$ 675,000$ 315,00042,00010,000$ 1,050,000S 750,000$ 300,00040,000SalesVariable CostContribution MarginMarket size (in units)To help the CFO in analyzing variance for the month of December 2020, the Company's controller hadprepared Variance Report on Cost as follows:VarianceValue$ 1,450 Favorable$ 900 Favorable$1,500 Favorable$ 6,090 Unfavorable$ 1,150 FavorableS 11,000 Unfavorable$ 1,000 FavorableRemarksThe direct-material price varianceThe direct-material usage varianceThe direct-material purchase price varianceThe direct-labor rate varianceThe direct-labor efficiency varianceThe Variable Overhead spending varianceThe Variable Overhead efficiency varianceThe Fixed Overhead spending varianceThe Fixed Overhead volume varianceNo VarianceS 7,500 Favorable

Required 1. The CEO asked you to recalculate the direct material purchase variance and the fixed overhead volume variance, because the controller had made a mistake in calculating the variances for November 2020. Provide the calculation and state whether the controller had calculated the variances correctly. 2. Assume that the rest of the variances had been calculated and remarked correctly. For each of the variances on the list above (including your correction for requirement no.1, if any): a. Provide a brief explanation of the causes of variance b. State who is responsible for the variance 3. Based on your analysis from the requirement (2) above, do you think the cost management has been applied successfully in the company?

Required 1. The CEO asked you to recalculate the direct material purchase variance and the fixed overhead volume variance, because the controller had made a mistake in calculating the variances for November 2020. Provide the calculation and state whether the controller had calculated the variances correctly. 2. Assume that the rest of the variances had been calculated and remarked correctly. For each of the variances on the list above (including your correction for requirement no.1, if any): a. Provide a brief explanation of the causes of variance b. State who is responsible for the variance 3. Based on your analysis from the requirement (2) above, do you think the cost management has been applied successfully in the company?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

Problem 2PB: The following product costs are available for Kellee Company on the production of eyeglass frames:...

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