ACC 206 Week 4 Chapter 7 Problem 5 Straightforward variance analysis
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Chapter 7 Problem 5: Straightforward variance analysis
Arrow Enterprises uses a standard costing system. The standard cost sheet for product no. 549 follows.
Direct materials: 4 units @ $6.50 $26.00
Direct labor: 8 hours @ $8.50 68.00
Variable factory overhead: 8 hours | @ $7.00 | 56.00 |
Fixed factory overhead: 8 hours | @ 2.5 | 20.00 |
Total standard cost per unit
The following information pertains to activity for December:
- 1. Direct materials acquired during the month amounted to 26,350 units at $6.40 per unit. All materials were consumed in operations.
- 2. Arrow incurred an average wage rate of $8.75 for 51,400 hours of activity.
- 3. Total overhead incurred amounted to $508,400. Budgeted fixed overhead totals $1.8 million and is spread evenly throughout the year.
- 4. Actual production amounted to 6,500 completed units.
Instructions:
- a. Compute Arrow’s direct material variances.
- b. Compute Arrow’s direct labor variances.
- c. Compute Arrow’s variances for factory overhead.
- 9 years ago
ACC 206 Week 4 Chapter 7 Problem 5 Straightforward variance analysis
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