90.2K

Verified Solution

Link Copied!

Lido Company's standard and actual costs for the most recent period, are given be-

low:

- 2,600 metres of material were purchased at $1.25 per metre, and 2,000 metres

were used,

• 1,420 hours of labour were assigned to produce 950 units. Direct labour actual hourly rate was $16.65
• Actual Variable manufacturing overhead amounted to $3.70 per labour hour. Lido uses direct labour hours as the cost driver for overhead application. Total Actual Fixed Overhead amounted to $11,500 for the period

Lido used the following manufacturing standards Per Unit:

* Direct Material: 2metres @$1.50 per metre

* Direct Labour : 1.25Hours @ $16.00per hour

* MOH Variable: 1.25Hours @ $3.50 per DLH

- Fixed: 1.25 Hrs @$10.00 based on capacity to produce 1,000 units

Required:

From the above information, compute the variances necessary to complete the following Variance Report. In the analysis section of the report, identify any exceptions and make recommendations based on your analysis. Provide the journal entries for direct materials and direct labour only.

Inputs: DM Outputs:950 units

Materials STD:2m @ $1.50 per m

AQ x AP AQ x SP SQ x SP

2,500m 2,500m

AQU x SP

Journal Entries:

Purchase:

Use:

Input: Output:950 units

Direct Labour STD: 1.25H @ $16.00 per hr

AH x AR AH x SR SH x SR

1,420 H 1,420H

Journal Entries:

Manufacturing Overhead : Variable Costs

Input: STD: 1.25H @ $3. 50per DLH Output: 950 units

AH x AR AH x SR SH x SR

1,420H x 1,420H x

Fixed:

Actual Budget Applied

$11,500 $12,500

Variance Analysis and Report

Variances F U

Direct Materials: - Price

- Quantity

Direct Labour - Rate

- Efficiency

Overhead Variable: - Spending

- Efficiency

Fixed: - Budget

- Volume

Totals:

WHO? WHAT? WHY?Analysis (briefly):

Identify any exceptions from the above, and explain why you consider them important.

Comment on the exceptions you have identified: Which variances will you seek more information on? Why?

Who are the managers you will address in order to get answers?: What information will you be looking for? Why?

Answer & Explanation Solved by verified expert

See Answer