accounting 202 questions 422904

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:

Don't use plagiarized sources. Get Your Custom Essay on

Get an essay WRITTEN FOR YOU, Plagiarism free, and by an EXPERT! Just from $10/Page

Order Essay

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?

Total standard direct labor cost

1b.By how much does this differ from the cost that was incurred?

Spending variance

2.	Break down the difference in cost from (1) above into a labor rate variance and a labor efficiency variance.

Labor rate variance

Labor efficiency variance $

3.	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.


Variable overhead rate variance	$
Variable overhead efficiency variance	$

questions 2

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.