Prepare variance analyses for the variable and fixed costs


Question:

Comprehensive Variance Problem

Trenton Manufacturing Company manufactures one product, with a standard cost detailed as follows:

Direct materials, 20 yards at $6 per yard

$120

Direct labor, 25 hours at $5 per hour

125

Factory overhead applied at 80% of

 

direct labor (variable costs = $75; fixed costs = $25)

100

Variable selling and administrative

80

Fixed selling and administrative

50

Total unit costs

$475

Standards have been computed based on a master budget activity level of 14,400 direct labor-hours per month. Actual activity for the past month was as follows:

Materials used

9,500 yards at $6.15 per yard

Direct labor

12,600 hours at $5.10 per hour

Total factory overhead

$55,500

Production

500 units

Required

Prepare variance analyses for the variable and fixed costs. Indicate which variances cannot be computed. Materials are purchased as they are used.

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Accounting Basics: Prepare variance analyses for the variable and fixed costs
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