Solve the below:
Q1: Hollowell Audio, Inc., manufactures military-specification compact discs. The company uses standards to control its costs. The labor standards that have been set for one disc are as follows:
Standard
Hours |
Standard
Rate |
Standard
Cost |
| 27 minutes |
$5.80 |
$2.61 |
During July, 9,675 hours of direct labor time were required to make 19,900 discs. The direct labor cost totaled $54,180 for the month.
Required:
1a. According to the standards, what direct labor cost should have been incurred to make the 19,900 discs?
1b. By how much does this differ from the cost that was incurred?
2. Break down the difference in cost from (1) above into a labor rate variance and a labor efficiency variance.
The budgeted variable manufacturing overhead rate is $4.1 per direct labor-hour. During July, the company incurred $44,505 in variable manufacturing overhead cost. Compute the variable overhead rate and efficiency variances for the month.
Q2: Sonne Company produces a perfume called Whim. The direct materials and direct labor standards for one bottle of Whim are given below:
Standard Quantity
or Hours |
Standard Price
or Rate |
Standard
Cost |
| Direct materials |
7.2 |
ounces |
$ |
3 |
per ounce |
$ |
21.6 |
| Direct labor |
0.5 |
hours |
$ |
10.4 |
per hour |
$ |
5.2 |
During the most recent month, the following activity was recorded:
a. 23,800 ounces of material were purchased at a cost of $2.9 per ounce.
b. The company produced only 2,500 bottles using 19,800 ounces of material. The rest of the material purchased remained in raw materials inventory.
c. 1,410 hours of direct labor time were recorded at a total labor cost of $17,202.
Required:
Compute the direct materials price and quantity variances for the month