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The Manjiri Corporation uses a standard cost system. It produces deluxe widgets and budgets for 1000 units to be produced and sold during the current...
The Manjiri Corporation uses a standard cost system. It produces deluxe widgets and budgets for 1000 units to be produced and sold during the current year. The budgeted sales price per widget is $400.The standard cost per deluxe widget is listed below. The firm allocates manufacturing overhead using direct labor hours.Standard Cost Per Deluxe WidgetDirect Material10 pounds per unit @ $2 per pound$ 20Direct Labor20 hours per unit @ $10 per labor hour 200Variable Manufacturing Overhead20 hours per unit @ $2 per hour 40Fixed Manufacturing Overhead20 hours per unit @ $3 per hour 60Standard Cost Per Unit$ 320NOTE: The predetermined fixed manufacturing overhead rate of $3 per hour is calculated as follows: (Budgeted Fixed Amount of $60,000) divided by (1000 units times 20 labor hours).A summary of actual activity during the year is listed below:Actual Sales totaled 1,200 units at an actual unit sales price per unit of $400.Actual Production totaled 1,200 units.Actual Materials Purchased amounted to $48,000 (12,000 pounds at $4 per pound).Actual Material Used amounted to 12,000 pounds.Actual Direct Labor Payroll amounted to $168,000 (21,000 hours @ $8 per hour).Actual Manufacturing Overhead totaled to:Actual Variable Manufacturing Overhead amounted to $48,000, andActual Fixed Manufacturing Overhead amounted to $66,000.REQUIRED: Note: For all variances indicate whether they are favorable(F) or Unfavorable(U).a) For direct materials, compute the price and quantity variances.b) For direct labor, compute the rate and efficiency variances.c) Compute the variable manufacturing overhead spending and efficiency variances.d) Compute the fixed manufacturing overhead budget and volume variances.
