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Classify the variations between favorable and unfavorable

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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.

Reference no: EM132573706

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