Brahma manufactures western hats.The company prepares flexible budgets and uses a standard cost system to control manufacturing costs.The following standard unit cost of a hat is based on the static budget volume of 20,000 hats per month:

Data for January of the current year include the following:
a.Actual production was 18,000 hats.
b.Actual direct materials purchased and used was 2.70 m2 per hat at an actual cost of $5.30 per m².
c.Actual direct labour usage of 38,500 hours cost $539,000.
d.Total actual overhead cost was $240,000.
Required:
1.Compute the price and efficiency variances for direct materials and direct labour.
2.For manufacturing overhead,compute the total variance,the flexible budget variance,and the production volume variance.

Question

Brahma manufactures western hats.The company prepares flexible budgets and uses a standard cost system to control manufacturing costs.The following standard unit cost of a hat is based on the static budget volume of 20,000 hats per month:

Data for January of the current year include the following:
a.Actual production was 18,000 hats.
b.Actual direct materials purchased and used was 2.70 m2 per hat at an actual cost of $5.30 per m².
c.Actual direct labour usage of 38,500 hours cost $539,000.
d.Total actual overhead cost was $240,000.
Required:
1.Compute the price and efficiency variances for direct materials and direct labour.
2.For manufacturing overhead,compute the total variance,the flexible budget variance,and the production volume variance.

Quizplus · Accepted Answer

The Answer of Brahma manufactures western hats.The company prepares flexible budgets and uses a standard cost system to control manufacturing costs.The following standard unit cost of a hat is based on the static budget volume of 20,000 hats per month: Data for January of the current year include the following: a.Actual production was 18,000 hats. b.Actual direct materials purchased and used was 2.70 m2 per hat at an actual cost of $5.30 per m². c.Actual direct labour usage of 38,500 hours cost $539,000. d.Total actual overhead cost was $240,000. Required: 1.Compute the price and efficiency variances for direct materials and direct labour. 2.For manufacturing overhead,compute the total variance,the flexible budget variance,and the production volume variance.

Brahma Manufactures Western Hats