Reference no: EM133079887
Question - Part A - Luna Company had planned to produce 160,000 units of widgets, however it actually produced 176,000. The Company uses machine hours to assign overhead to products. Each unit requires 0.6 standard machine. The fixed overhead rate is $13 per machine hour and the variable overhead rate is 7.16 per direct labour hour.
Required -
1. Calculate the total allocated fixed overhead.
2. Calculate the budget fixed overhead.
3. Using the spending variance calculate the actual fixed overhead.
4. Calculate the total allocated variable overhead.
Part B - Bella produces a variety of makeup items and has developed the following standard costs for five overhead items:
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Overhead Item
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Total Fixed Cost
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Variable Rate per Direct Labour Hour
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Rent
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$55,000
|
|
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Electricity
|
|
$0.65
|
|
Indirect Labour
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180,000
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2.15
|
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Repairs
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92,000
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0.15
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Cleaning
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80,000
|
|
Next year Bella expects production to require 95,000 direct labour hours. Assume that actual production required 100,000 direct labour hours at standard.
The actual overhead costs incurred were as follows:
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Rent
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55,000
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Electricity
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48,600
|
|
Indirect Labour
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360,000
|
Repairs
|
85,000
|
|
Cleaning
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78,200
|
|
|
Required - Prepare a performance report for the period based on actual production
Part C - At the start of the year Bella had the following standard cost sheet for one of its makeup products:
Direct Materials (2 kilograms @ $15)
Direct Labour (3 hours @ $18)
The actual results for the year were:
Units produced 225,000
Materials purchased 565,000 kilograms at $14.50
Material used 562,500 kilograms
Direct labour 460,000 hours $17.85
Required -
1. What is the standard prime cost per unit.
2. Compute the price and usage variances for materials.
3. Compute the labour rate and labour efficiency variances.
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