Based on the variance you calculated develop some plausible

Reference no: EM13588915

The Beal Manufacturing Company's job-costing system has two-direct cost categories; direct materials and direct manufacturing labor. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of standard direct manufacturing labor-hours (DLH). At the beginning of 2014, Beal adopted the following standards for its manufacturing costs:

INPUT Cost per output unit
Direct Materials 3 lbs. @ $5 per lb. $ 15.00
Direct Manufacturing Labor 5 hrs. @ $15 per hr. $ 75.00
Manufacturing Overhead
Variable $6 per DLH $ 30.00
Fixed $8 per DLH $ 40.00
Std. Cost per output unit $ 160.000

The denominator level for total manufacturing overhead per month in 2014 is 40,000 direct manufacturing labor-hours. Bell's actual budget for January indicated the following:

Direct Materials purchased 25,000 lbs. @$5.20 per lb.
Direct Materials used 23,100 lbs.
Direct Manufacturing Labor 40,100 hrs. @$14.60 per hr.
Total Actual Manufacturing Overhead (variable and fixed) $600,000
Actual Production 7,800 output units

For the month of January 2014, compute the following variances, indicating whether each is favorable (F) or unfavorable (U):
a. Direct materials price variance, based on purchases
b. Direct materials efficiency variance
c. Direct manufacturing labor price variance
d. Direct manufacturing labor efficiency variance
e. Total manufacturing overhead spending variance
f. Variable manufacturing overhead efficiency variance
g. Production-volume variance

2. Based on the variance you calculated, develop some plausible explanations for what could have occurred at Beal Manufacturing

Reference no: EM13588915

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