Exercise 11-3 Kimm Company has gathered the following information about its product. Direct materials: Each unit of product contains 3.60 pounds of materials. The average waste and spoilage pe

Exercise 11-3

Kimm Company has gathered the following information about its product.

Direct materials: Each unit of product contains 3.60 pounds of materials. The average waste and spoilage per unit produced under normal conditions is 0.40 pounds. Materials cost $3 per pound, but Kimm always takes the 4.54% cash discount all of its suppliers offer. Freight costs average $0.44 per pound.

Direct labor. Each unit requires 1.40 hours of labor. Setup, cleanup, and downtime average 0.22 hours per unit. The average hourly pay rate of Kimm’s employees is $13.70. Payroll taxes and fringe benefits are an additional $3.80 per hour.

Manufacturing overhead. Overhead is applied at a rate of $6.90 per direct labor hour.

Compute Kimm’s total standard cost per unit. (Round answer to 2 decimal places, e.g. 1.25.)

Total standard cost per unit $

11-6 Lewis Company’s standard labor cost of producing one unit of Product DD is 3.50 hours at the rate of $12.00 per hour. During August, 40,400 hours of labor are incurred at a cost of $12.13 per hour to produce 11,400 units of Product DD.

(a) Compute the total labor variance.

Total labor variance $

(b) Compute the labor price and quantity variances.

Labor price variance $

Labor quantity variance $

(c) Compute the labor price and quantity variances, assuming the standard is 3.82 hours of direct labor at $12.27 per hour.

Labor price variance $

Labor quantity variance $

11-1a Costello Corporation manufactures a single product. The standard cost per unit of product is shown below.

Direct materials—3 pound plastic at $6.90 per pound $ 20.70

Direct labor—2.50 hours at $12.00 per hour 30.00

Variable manufacturing overhead 20.00

Fixed manufacturing overhead 10.00

Total standard cost per unit $80.70

The predetermined manufacturing overhead rate is $12 per direct labor hour ($30.00 ÷ 2.50). It was computed from a master manufacturing overhead budget based on normal production of 13,500 direct labor hours (5,400 units) for the month. The master budget showed total variable costs of $108,000 ($8.00 per hour) and total fixed overhead costs of $54,000 ($4.00 per hour). Actual costs for October in producing 3,700 units were as follows.

Direct materials (11,230 pounds) $ 79,845

Direct labor (9,060 hours) 110,713

Variable overhead 83,581

Fixed overhead 29,699

Total manufacturing costs $303,838

The purchasing department buys the quantities of raw materials that are expected to be used in production each month. Raw materials inventories, therefore, can be ignored.

(a) Compute all of the materials and labor variances. (Round answers to 0 decimal places, e.g. 125.)

Total materials variance $

Materials price variance $

Materials quantity variance $

Total labor variance $

Labor price variance $

Labor quantity variance $

(b) Compute the total overhead variance.

Total overhead variance $

Leave a Comment