Reference no: EM132994251

Question - A) OL Company manufactures ceramic vases. It uses its standard costing system when developing its flexible-budget amounts. In April 2021, 2,000 finished units were produced. The following information relates to its two direct manufacturing cost categories: direct materials and direct manufacturing labor.

Direct materials used were 4,200 kilograms (kg). The standard direct materials input allowed for one output unit is 2 kilograms at $15 per kilogram. OL purchased 5,000 kilograms of materials at $15.70 per kilogram, a total of $78,500.

Actual direct manufacturing labor-hours were 3,250, at a total cost of $66,300. Standard manufacturing labor time allowed is 1.5 hours per output unit, and the standard direct manufacturing labor cost is $21 per hour. Calculate the direct materials variances and direct manufacturing labor variances.

B) Mega Power Co., manufactured and sold 1000 solar system last year at a price $700 each. The cost structure of solar system is as follows: Variable cost per system $300, factory overhead (total fixed costs $250,000). Due to heavy competition, price has to be reduce to $630 for the coming year. Assuming no change in costs, state the number of solar system that would have to be sold at the new price to ensure the same amount of profits that of the last year.