Reference no: EM132573706
The company "Carpinteros Inc." produces oversized library shelves. The budget contains the following information:
Estimated production for the period - 12 units.
STANDARD COST CARD FOR LIBRARY RACKS
Cost Element Estimated Quantity for Each Unit Produced Price by unit Cost per unit produced
Direct materials 8 pieces $ 10.00 $ 80.00
Direct Labor 40 hours $ 6.00 $ 240.00
Indirect manufacturing costs 40 $ 0.75 $ 30.00
Total Standard Cost per unit $ 350.00
Operations of the month:
Purchase of 148 pieces of direct materials for $ 11.00 each piece for a total of $ 1,628.00
Materials Used - 140 pieces
Labor employed in manufacturing - 714 at $ 6.50 per hour for a total of $ 4,641.00
Indirect Manufacturing Cost - $ 406.00
Production: 14 units finished
Instructions
Carefully read the following above.
Question 1: Prepare variance analysis between standard costs and actual costs.
Question 2: Classify the variations between favorable and unfavorable.
Question 3: Mention the reasons for the variations.
Question 4: Mention the impact that the variations found could have on the operation of the company.