Standard Job Order Costing - Variance Analysis
Special order lamps are manufactured in division S. Because of the precise nature of the process a standard cost system has been developed. The blowing standards are used for the special orders:
Standards:
Lamp Kits $ 16.000000 per lamp
Direct Labor 2.400000 per lamp (4 lamps/hr.)
Variable Overhead 0.250000 per lamp (4 lamps/hr.)
Fixed Overhead 10.000000 per lamp
Total $ 28.650000
Fixed overhead is based on expected production of 4.009 customized lamps each month.
To keep records of the actual cost of a job. a Job Order Cost System has been developed. Entries are made to the Job Order System at actual cost (overhead is applied based on actual labor hours) while entries are made to the accounting system at standard. Variance analysis is used to analyze the differences.
Job Order Costing Section:
On January 1. 20x2. Division S began Job 1101 for the Client. THE BIG CHILDREN STORE. The job called for 4.000 customized lamps.
The following set of transactions occurred from January 5 until the job was completed:
5-Jan Purchased 4.000 Lamp Kits © $16.75 per kit.
9-Jan 4.075 sets of Lamp Kits were requisitioned.
17-Jan Payroll of 560 Direct Labor Hours Q $9.45 per hour.
30-Jan Payroll of 610 Direct Labor Hours © $9.70 per hour.
30-Jan 3.991 lamps were completed and shipped. All materials requisitioned were used or scrapped.
Month End Overhead Information
Actual Variable Overhead $ 1.193.40
Actual Fixed Overhead $ 39.373.45
How many Lamps were completed?
Note: Show favorable variances as negative numbers
What was the total material price variance for the Lamp Kits purchased?
What was the material usage variance for Lamp Kits?
What was the direct labor efficiency variance ?
What was the direct labor rate variance?
Note: Show favorable variances as negative numbers
What was the variable overhead efficiency variance ?
What was the variable OH spending variance ?
What is the fixed OH volume (denominator) variance?
What is the fixed OH spending variance?