Dixon manufacturing company makes alluminum alloy wheels for automobiles, they recently introduced one to fit small sports cars. the following standards are used for the new product,
amount of material per wheel 2 pounds
price of direct material per pound $7.50
quantity of labor per wheel 2.50 hours
price of direct labor per hour $16.00/hr
total budgeted fixed overhead $168000
in its first year of production dixon planned to produce 3000 sets of wheels. Because of unexpected demands it actually produced 3600 sets of wheels. by year end direct material purchased and used amount to 30000 pounds of alluminum at a cost of 234000. direct labor was 16.80 per hour. actual hours worked were 2.2 hrs per wheel. Overhead for the year was 180000. overhead is applied to products using a predetermined overhead overhead rate based on total estimated number of wheels produced.
Required
a. compute standard cost per wheel of direct materials, direct labor and overhead
b. determine the total standard cost per wheel
c. compute the actual cost per wheel for direct materials, direct labor and overhead
d. compute actual cost per wheel
e. compute price and usage variaance for direct materials and direct labor.
f. compute the fixed manufacturing overhead cost spending and volume varience and explain your findings.