ACCOUNTING-Not only did our salespeople do a good job in meeting the sales budget

QUESTION

“Wonderful! Not only did our salespeople do a good job in meeting the sales budget this year, but our production people did a good job in controlling costs as well,” said Kim Clark, president of Martell Company. “Our $18,300 overall manufacturing cost variance is only 1.2% of the $1,536,000 standard cost of products made during the year. That’s well within the 3% parameter set by management for acceptable variances. It looks like everyone will be in line for a bonus this year.” The company produces and sells a single product. The standard cost card for the product follows:Standard Cost Card—per Unit Direct materials, 2 feet at $8.45 per foot$16.90 Direct labor, 1.4 direct labor-hours at $16 per direct labor-hour22.40 Variable overhead, 1.4 direct labor-hours at $2.50 per direct labor-hour3.50 Fixed overhead, 1.4 direct labor-hours at $6 per direct labor-hour8.40 Standard cost per unit$51.20 The following additional information is available for the year just completed:a.The company manufactured 30,000 units of product during the year.b.A total of 64,000 feet of material was purchased during the year at a cost of $8.55 per foot. All of this material was used to manufacture the 30,000 units. There were no beginning or ending inventories for the year.c.The company worked 43,500 direct labor-hours during the year at a direct labor cost of $15.80 per hour.d.Overhead is applied to products on the basis of standard direct labor-hours. Data relating to manufacturing overhead costs follow: Denominator activity level (direct labor-hours)35,000 Budgeted fixed overhead costs$210,000 Actual variable overhead costs incurred$108,000 Actual fixed overhead costs incurred$211,800 3.For manufacturing overhead compute:a.The variable overhead rate and efficiency variances for the year. (Round Standard Rate and Actual Rate to 2 decimal places. Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance).

ANSWER:

REQUEST HELP FROM A TUTOR