Question 1: Yellow Industries decides to price delivery service according to the results of a recent activity-based costing (ABC) study. The study indicates Yellow should charge $8 per order, 2% of the order's value for general delivery costs, $1.25 per item, and $30 for delivery.
A year later, Yellow collected the following information for two of its best customers:
Cost Driver Customer X Customer Y
Number of orders 18 8
Number of deliveries 10 10
Number of items 2000 4000
Order value $120,000 $80,000
Part A) . What are the total delivery costs charged to Customer Y during the year?
Part B) . What are the total delivery costs charged to Customer X during the year?
Question 2:
Bear Industries employs a standard cost system in which direct materials inventory is carried at standard cost. Bear has established the following standards for the prime costs of one unit of production:
Standard Quantity Standard Price Standard Cost
Direct materials 8 pounds $1.80 per pound $14.40
Direct labor .25 hour $8.00 per hour 2.00
$16.40
During the month of July, Bear purchased 160,000 pounds of direct materials at a total cost of $304,000. The total factory wages for November were $42,000, 90% of which were for direct labor. Bear manufactured 19,000 units of product during July, using 142,500 pounds of direct materials and 5,000 direct labor hours.
A) What is the direct labor (rate) variance for July? Indicate if it is favorable or unfavorable.
B) What is the direct labor efficiency variance for July? Indicate if it is favorable or unfavorable.