Bowser Products operates a small plant in New Mexico that
Question # 00075942
Posted By:
Updated on: 06/15/2015 11:05 AM Due on: 06/16/2015
Bowser Products operates a small plant in New Mexico that produces dog food in batches of 1,500 pounds. The product sells for $6 per pound. standard cost for 2015 are:
Standard direct labor cost = $15 per hour
standard direct labor hours per batch = 10 hours
standard price of material A = $0.35 per pound
standard pounds of material A per batch = 800 pounds
standard price for material B = $0.55 per pound
standard pounds of material B per batch = 250 pounds
fixed overhead cost per batch = $500
At the start of 2015, the company estimated monthly production and sales of 50 batches. The company estimated that all overhead costs were fixed and amounted to $25,000 per month. During the month of June 2015 (typically a slow month), 42 batches were produced (not an unusual level of production for June). The following costs were incurred:
direct labor cost were $7,800 for 460 hours.
37,500 pounds of material A costing $8,500 were purchased and used.
12,000 pounds of material B costing $5,600 were purchased and used.
Fixed overhead of 423,000 was incurred.
question a) calculate variances for material, labor, and overhead.
question b) prepare a summary of the variances. Does the unfavorable overhead volume variance suggest that overhead cost are out of control?
Standard direct labor cost = $15 per hour
standard direct labor hours per batch = 10 hours
standard price of material A = $0.35 per pound
standard pounds of material A per batch = 800 pounds
standard price for material B = $0.55 per pound
standard pounds of material B per batch = 250 pounds
fixed overhead cost per batch = $500
At the start of 2015, the company estimated monthly production and sales of 50 batches. The company estimated that all overhead costs were fixed and amounted to $25,000 per month. During the month of June 2015 (typically a slow month), 42 batches were produced (not an unusual level of production for June). The following costs were incurred:
direct labor cost were $7,800 for 460 hours.
37,500 pounds of material A costing $8,500 were purchased and used.
12,000 pounds of material B costing $5,600 were purchased and used.
Fixed overhead of 423,000 was incurred.
question a) calculate variances for material, labor, and overhead.
question b) prepare a summary of the variances. Does the unfavorable overhead volume variance suggest that overhead cost are out of control?
-
Rating:
/5
Solution: Bowser Products operates a small plant in New Mexico that