Comprehensive - Chapter 16 & 17
Maxym Yattselev, the managerial accountant has been asked by the Keepit Cool Ceiling Fan Company president to prepare an analysis of the effectiveness of the new management team. They manufacture paper fans.
2005 standards
Budget
Direct materials - 4 parts @ $2 per part
Direct labor - one half hour (0.5) @ $10 per hour
Variable overhead 2 machine hours @ $3 per hour
Fixed overhead $900,000
Estimated production 100,000
Actual results 2005
Direct materials 585,000 parts at a total cost of $ 1,462,500 were purchased and used
Direct labor 51,000 hours at a cost of $561,000
Variable overhead 240,000 machine hours at a cost of $840,000
Fixed overhead $870,000
Actual production 130,000 fans
Required:
(1) Compute the direct material and direct labor budget variances
(2) Compute the variable and fixed overhead variances

Question

Comprehensive - Chapter 16 & 17
Maxym Yattselev, the managerial accountant has been asked by the Keepit Cool Ceiling Fan Company president to prepare an analysis of the effectiveness of the new management team. They manufacture paper fans.
2005 standards 
Budget
Direct materials - 4 parts @ $2 per part
Direct labor - one half hour (0.5) @ $10 per hour 
Variable overhead 2 machine hours @ $3 per hour 
Fixed overhead $900,000
Estimated production 100,000 
Actual results 2005
Direct materials 585,000 parts at a total cost of $ 1,462,500 were purchased and used 
Direct labor 51,000 hours at a cost of $561,000
Variable overhead 240,000 machine hours at a cost of $840,000 
Fixed overhead $870,000
Actual production 130,000 fans 
Required:
(1) Compute the direct material and direct labor budget variances
(2) Compute the variable and fixed overhead variances

Quizplus · Accepted Answer

The Answer of Comprehensive - Chapter 16 & 17
Maxym Yattselev, the managerial accountant has been asked by the Keepit Cool Ceiling Fan Company president to prepare an analysis of the effectiveness of the new management team. They manufacture paper fans.
2005 standards 
Budget
Direct materials - 4 parts @ $2 per part
Direct labor - one half hour (0.5) @ $10 per hour 
Variable overhead 2 machine hours @ $3 per hour 
Fixed overhead $900,000
Estimated production 100,000 
Actual results 2005
Direct materials 585,000 parts at a total cost of $ 1,462,500 were purchased and used 
Direct labor 51,000 hours at a cost of $561,000
Variable overhead 240,000 machine hours at a cost of $840,000 
Fixed overhead $870,000
Actual production 130,000 fans 
Required:
(1) Compute the direct material and direct labor budget variances
(2) Compute the variable and fixed overhead variances