Problem - Flandro Company uses a standard cost system and sets predetermined overhead rates on the basis of direct labor-hours. The following data are taken from the company's budget for the current year:
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Denominator activity (direct labor-hours)
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12,800
|
|
Variable manufacturing overhead cost
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$60,160
|
|
Fixed manufacturing overhead cost
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$128,000
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The standard cost card for the company's only product is given below:
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Direct materials, 3 yards at $3.40 per yard
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$10.20
|
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Direct labor, 2 hour at $11 per hour
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22.00
|
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Manufacturing overhead, 133.64% of direct labor cost
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29.40
|
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Standard cost per unit
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$61.60
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During the year, the company produced 4,800 units of product and incurred the following costs:
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Materials purchased, 36,000 yards at $3.30 per yard
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$118,800
|
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Materials used in production (in yards)
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25,000
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Direct labor cost incurred, 13,000 hours at $8.4 per hour
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$109,200
|
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Variable manufacturing overhead cost incurred
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$34,600
|
|
Fixed manufacturing overhead cost incurred
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$33,800
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Requirement 1: Redo the standard cost card in a clearer, more usable format by detailing the variable and fixed overhead cost elements.
Requirement 2: Prepare an analysis of the variances for direct materials and direct labor for the year.
Requirement 3: Prepare an analysis of the variances for variable and fixed overhead for the year.