29 Jun Question ARC Company produces several products in i
Question
ARC Company produces several products in its factory, including a karate robe. The company uses a standard cost system to assist in the control of costs. According to the standards that have been set for the robes, the factory should work 780 direct labor-hours each month and produce 3,900 robes. The standard costs associated with this level of production are as follows:
Total Per Unit of
Product
Direct materials …………………… $73,710 $18.90
Direct labor ………………………… $13,260 3.40
Variable manufacturing overhead (based on
direct labor-hours) ………………. $2,340 0.60
$22.90
During April, the factory worked only 750 direct labor-hours and produced 4,000 robes. The following actual costs were recorded during the month:
Total Per Unit of
Product
Direct materials (12,400 yards) …………… $74,400 $18.60
Direct labor ……………………………………. $14,400 3.60
Variable manufacturing overhead ………. $8,000 2.00
$24.20
At standard, each robe should require 3.0 yards of material. All of the materials purchased during the month were used in production. Overhead applied based on direct labor hours. For standards and actuals, you are given total costs and the per unit cost. For standards and actuals, you’ll need to (2) convert the total cost of DM to a cost per yard, (2) convert the total cost of DL to a cost per direct labor hour and (3) covert the total cost of variable overhead to a cost per direct labor hour.
Required:
For Direct Materials–
1. What is the actual quantity of input at the actual price?
2. What is the actual quantity of input at the standard price?
3. What is the standard quantity of input allowed for the actual output?
4. What is the standard quantity of input allowed for the actual output at the standard price?
5. What is the flexible budget?
6. What is the DM price variance?
7. What is the DM quantity variance?
8. Check Figure–What is the total variance associated with DM? $1,200F.
For Direct Labor–
9. What is the actual quantity of input at the actual price?
10. What is the actual quantity of input at the standard price?
11. What is the standard quantity of input allowed for the actual output?
12. What is the standard quantity of input allowed for the actual output at the standard price?
13. What is the flexible budget?
14. What is the DL price variance?
15. What is the DL quantity variance?
16. Check Figure–What is the total variance associated with DL? $800U.
For Variable Overhead–
17. What is the actual quantity of input at the actual price?
18. What is the actual quantity of input at the standard price?
19. What is the standard quantity of input allowed for the actual output?
20. What is the standard quantity of input allowed for the actual output at the standard price?
21. What is the flexible budget?
22. What is the Variable OH price variance?
23. What is the Variable OH quantity variance?
24. Check Figure–What is the total variance associated with Variable OH? $5,600 U.
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