In the past the 10 persons employed in the production of

Assignment Help Accounting Basics

Reference no: EM13575223

Barberry, Inc., manufactures a product called Fruta. The company uses a standard cost system and has established the following standards for one unit of Fruta:

	Standard Quantity	Standard Price or Rate			Standard Cost
Direct materials	1.6 pounds	$	6.10	per pound	$	9.76
Direct labor	0.6 hours	$	11.90	per hour		7.14
Variable manufacturing overhead	0.6 hours	$	2.80	per hour		1.68

					$	18.58

During June, the company recorded this activity related to production of Fruta:

a.	The company produced 3,300 units during June.
b.	A total of 8,900 pounds of material were purchased at a cost of $52,510.
c.	There was no beginning inventory of materials; however, at the end of the month, 2,300 pounds of material remained in ending inventory.
d.	The company employs 10 persons to work on the production of Fruta. During June, they worked an average of 158 hours at an average rate of $12.60 per hour.
e.	Variable manufacturing overhead is assigned to Fruta on the basis of direct labor-hours. Variable manufacturing overhead costs during June totaled $3,950.

The company's management is anxious to determine the efficiency of Fruta production activities.

Required:

1.	For direct materials:

Compute the price and quantity variances. (Input all amounts as positive values. Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)


Materials price variance	$	F None U
Materials quantity variance	$	F None U

The materials were purchased from a new supplier who is anxious to enter into a long term purchase contract. Would you recommend that the company sign the contract?

	Yes
	No

2.	For labor employed in the production of Fruta:

Compute the rate and efficiency variances. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)


Labor rate variance	$	F None U
Labor efficiency variance	$	F None U

In the past, the 10 persons employed in the production of Fruta consisted of 4 senior workers and 6 assistants. During June, the company experimented with 5 senior workers and 5 assistants. Would you recommend that the new labor mix be continued?

	Yes
	No

3a.

Compute the variable overhead rate and efficiency variances. (Input all amounts as positive values. Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)


Variable overhead rate variance	$	F None U
Variable overhead efficiency variance	$	F None U

Reference no: EM13575223

Questions Cloud

Determine the depreciation expense and the ending book : acme corporation purchased a new machine on september 30 20x1 at a cost of 23000. the machine is expected to last five

Stritch company is trying to decide how many units of : stritch company is trying to decide how many units of merchandise to order each month. the companys policy is to have

Mickelson corporation will pay a 290 per share dividend : mickelson corporation will pay a 2.90 per share dividend next year. the next company pledges to increase its dividend

At the 005 significance level is there sufficient evidence : a certain researcher thinks that the proportion of women who say that female bosses are harshly critical is greater

In the past the 10 persons employed in the production of : barberry inc. manufactures a product called fruta. the company uses a standard cost system and has established the

Calculate the weighted average cost of capital on the basis : calculate the weighted average cost of capital on the basis of historical market value weights forlong-term debt

Determine the p-value for this test is there sufficient : consider the hypothesis test given byh0 mu 530h1 mu ne 530in a random sample of 85 subjects the sample mean is found

The worldwide credit card inc uses standards to control the : the worldwide credit card inc. uses standards to control the labor time involved in opening mail from card holders and

Price ratio analysis for internet companies given the : price ratio analysis for internet companies given the information below for hooyah corporation compute the expected

User Account

All Pages