Headsmart manufactures headphone casesnbsp during september

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Reference no: EM13355597

Headsmart manufactures headphone cases. During September 2011, the company produced 106,000 cases and recorded the following cost data:

Standard Cost Information
	Quantity	Price
Direct materials	2 parts	$0.17 per part
Direct labor	0.02 hours	$9.00 per hour
Variable manufacturing overhead	0.02 hours	$10.00 per hour

Fixed manufacturing overhead ($32,640 for static budget volume of 96,000 units and 1,920 units and 1,920 hours, or $17 per hour)

Direct materials (265,000 parts were purchased at $0.22 per part, 215,000 parts were used)

Direct labor (1,700 hours at $9.10 per hour=$15,652)

Manufacturing overhead $60,500 (30% was fixed)

a) Determine the eight variances

1.Materials: VP=(AP-SP)AQ-(actual price-standard price)*actual quantity

VQ=(AQ-SQ)*SP

2.Direct labor: VP=(AP-SP)*AQ and VQ=(AQ-SQ)*SP

3.Variable overhead: VP=(AP-SP)*AQ and VQ=(AQ-SQ)*SP

4.Fixed overhead: SPENDING VARIANCE= actual fixed overhead incurred- fixed factory overhead budgeting

PRODUCTION VOLUME VARIANCE = fixed factory overhead budgeting - standard fixed overhead applied

b) Comment on the variances

Reference no: EM13355597

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