Flandro Company uses a standard cost system and sets its predetermined overhead rate on the basis of direct labor-hours. The following data are taken from the company's planning budget for the current year: Denominator activity (direct labor-hours) 5,000
Variable manufacturing overhead cost $25,000
Fixed manufacturing overhead cost $59,000
The standard cost card for the company's only product is given below:
Standarcd Standard Standard
Quantity or Price or Cost
Inputs Hours Rate (1) x (2)
Direct materials 3 yards 4.40 per yard 13.20
Direct labor 1 hour 12 per hour 12.00
Manufacturing overhead
hour 1 hour 16.80 per hour 16.80
Total standard cost per unit 42.00
During the year, the company produced 6,000 units of product and incurred the following actual results:
Materials purchased, 24,000 yards at $4.80 per yard $115,200
Materials used in production (in yards) 18,500
Direct labor cost incurred, 5,800 hours at $13 per hour $75,400
Variable manufacturing overhead cost incurred $29,580
Fixed manufacturing overhead cost incurred $60,400
Required:
1. Create a new standard cost card that separates the variable manufacturing overhead per unit and the fixed manufacturing overhead per unit.
2. Compute the materials price and quantity variances. Also, compute the labor rate and efficiency variances.
3. Compute the variable overhead rate and efficiency variances. Also, compute the fixed overhead budget and volume variances.