1.Fletcher Company collected the following data regarding production of one of its products. Compute the total direct materials
1 answer:
Answer:
Fletcher
.b. $3,570 unfavorable
Summerline
e. $2,950 unfavorable
Grant
b. $6,000U
Explanation:
<h2>First Company Fletcher</h2>DIRECT MATERIALS VARIANCES
std cost $ 2.00
actual cost $ 1.99 ($483,570 actual cost/ 243,000 actual lbs)
quantity 243,000
difference $ 0.01
price variance $2,430.00
The diference is positive, we saved cash from the purchase of direct materials, the variance is favorable.
std quantity 240000.00
actual quantity 243000.00
std cost $2.00
difference -3000.00
efficiency variance $(6,000.00)
The diference is negative, we used more lbs than we expected, this variable is unfavorable
Total:
2,430 - 6,000 = -3,570
<h2>Second company Sumerlin</h2>DIRECT MATERIALS VARIANCES
For this company, all the values are given we just need to plug into the formula
std cost $5.00
actual cost $5.10
quantity 4,500
difference $(0.10)
price variance $(450.00)
The actial price is higher so it is more expensive. The difference with the standard is negative. The vaiance is unfavorable
std quantity 4000.00 (is a given "budget 4,000 for 2,000 units")
actual quantity 4500.00
std cost $5.00
difference -500.00
efficiency variance $(2,500.00)
Total
-450 - 2,500 = -2,950
<h2>Third Company Grant</h2>23,000 units x 2 hs = 46,000 standar hours
46,000 x $4 per unit = 184,000 standard variable overhead
actual overhead (190,000)
variance (6,000) unfavorable, the actual cost are higher than it should be.
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Answer:
Refer To The attached screen shot. It contains the Income Statement Prepared under Absorption Costing.
Explanation:
Absorption Costing assumes that the Manufacturing Costs include Direct Material, Direct Labor, Variable Overhead, and Fixed Overhead. Whereas, Selling and Administrative Expenses are classified as period Costs. These period costs are recognized in the period in which they are incurred. On the other hand, the manufacturing costs are recognized when the goods on which the costs were incurred are sold. That's why we don't recognize $78,000 as a Fixed Overhead because these overhead costs were incurred to produce 6,000 rackets. We have to calculate the fixed overhead cost per unit and multiply it with the units sold.
I hope I made it clear. If you have any queries, feel free to contact me.
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