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Ray Company provided the following excerpts from its Production Department's flexible budget performance report: Ray Company Production Department Flexible Budget Performance Report For the Mohth Ended August 31 Actual Spending Flexible Activity Planning Results Variances Budget Variances /Budget 9,480 $134730 Labor-hours ( Direct labor ($) Indirect labor ($?+$1.50g Utilities ($6,500+$?g). Supplies ($?+ $2) Equipment depreciation ($78,400) Factory administration ($18,700+$1.90) Total expense 9,000 $132.720$ ? 1,780 F 21,640 ? 1,450 U 336 U2,800 4.300 49404,444 $288,088 $? $?$RS? Required: Complete the Production Department's Flexible Budget Performance Report by filling in all the question marks Page 441 You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company's costing system and "do what you can to help us get better control of our manufacturing overhead costs." You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March: Actual Cost Cost Formula in March Utilities $20,600 $0.10 per machine-hour $24,200 Maintenance $40,000+ $1.60 per machine-hour 78,100 $8,400 Indirect labor $130,000+$0.70 per machine-hour $149,600 s 71,500 Supplies $0.30 per machine-hour Depreciation $70,000 During March, the company worked 26,000 machine-hours and produced 15,000 units. The company had originally planned to work 30,000 machine-hours during March. Required: 1. Calculate the activity variances for March. (Hint: Refer to Exhibit 9-6.) Explain what these variances mean. 2. Calculate the spending variances for March. (Hint: Refer to Exhibit 9-7.) Explain what these variances mean. Marvel Parts, Inc., manufactures auto accessories. One of the company's products is a set of seat covers that can be adjusted to fit nearly any small car. The company uses a standard cost system for all of its products. According to the standards that have been set for the seat covers, the factory should work 2,850 hours each month to produce 1,900 sets of covers. The standard costs associated with this level of production are: Per Set Total of Covers $42,560 $22.40 $51,300 2700 Direct materials Direct labor Variable manufacturing overhead $6,840 3.60 $53.00 (based on direct labor-hours) During August, the factory worked only 2,800 direct labor-hours and produced 2,000 sets of covers. The following actual costs were recorded during the month: Per Se Total of Covers Direct materials (12,000 yards) $45,600 $22.80 $49,000 24.50 Variable manufacturing overhead $7,000 3.50 $50.80 Direct labor At standard, each set of covers should require 5.6 yards of material. All of the materials purchased during the month were used in production Per Set Total of Covers Direct materials (12,000 yards) $45,600 $22.80 $49,000 24.50 Variable manufacturing overhead $7.000 3.50 $50.80 Direct labor At standard, each set of covers should require 5.6 yards of material. All of the materials purchased during the month were used in production Required Compute the following variances for August 1. The materials price and quantity variances 2. The labor rate and efficiency variances. 3. The variable overhead rate and efficiency variances. Sharp Company manufactures a product for which the following standards have been set: Standard Quantity Standard Price Standard or Hours or Rate $11 per foot Cost $33 3 feet 2 hours? per hour Direct materials Direct labor During March, the company purchased direct materials at a cost of $111,300, all of which were used in the production of 3,200 units of product. In addition, 4,900 direct labor-hours were worked on the product during the month. The cost of this labor time was $95,550. The following variances have been computed for the month: $4,400 U $450 F $2,000 U Materials quantity variance Labor spending variance Labor efficiency variance Required 1. For direct materials: a. Compute the actual cost per foot of materials for March. b. Compute the price variance and the spending variance 2. For direct labor a. Compute the standard direct labor rate per hour. b. Compute the standard hours allowed for the month's production. e Compute the standard hour allowed per unit of product. Ray Company provided the following excerpts from its Production Department's flexible budget performance report: Ray Company Production Department Flexible Budget Performance Report For the Month Ended August 31 Actual Spending Flexible Activity Planning Results Variances Budget Variances Budget 9,000 Labor-hours (g Direct labor ($?g) Indirect labor ($? $1.50g Utilities ($6,500 $?) Supplies ($?+ $2) Equipment depreciation ($78,400) Factory administration ($18,700+$1.90) Total expense 9,480 $134,730 $? $%132,720$? $ ? 1,780 F 21,640 336 U12.800 4,300 ?1,450 U 49404,44 $288,088 $$$ $ ? Required: Complete the Production Department's Flexible Budget Performance Report by filling in all the question marks You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company's costing system and "do what you can to help us get better control of our manufacturing overhead costs." You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March: Actual Cost in March Cost Formula 20,600 $0.10 per machine-hour$24,.200 Maintenance $40,000+$1.60 per machine-hour $ 78,100 $8.400 Indirect labor $130,000 S0.70 per machine-hour $149.600 71,500 Utilities $0.30 per machine-hour Supplies Depreciation $70,000 During March, the company worked 26,000 machine-hours and produced 15,000 units. The company had originally planned to work 30,000 machine-hours during March. Required: 1. Calculate the activity variances for March. (Hint: Refer to Exhibit 9-6.) Explain what these variances mean. 2. Calculate the spending variances for March. (Hint Refer to Exhibit 9-7.) Explain what these variances mean Marvel Parts, Inc., manufactures auto accessories. One of the company's products is a set of seat covers that can be adjusted to fit nearly any small car. The company uses a standard cost system for all of its products. According to the standards that have been set for the seat covers, the factory should work 2,850 hours each month to produce 1,900 sets of covers. The standard costs associated with this level of production are: Per Set Total of Covers $42,560 $22.40 $51,300 2700 Direct materials Direct labor Variable manufacturing overhead (based on direct labor-hours) 80 3.60 $53.00 . The following actual costs During August, the factory worked only 2,800 direct labor-hours and produced were recorded during the month: 2,000 sets of covers Per Set Total of Covers Direct materials (12,000 yards) $45,600 $22.80 $49,000 24.50 Direct labor Variable manufacturing overhead $7,000 3.50 $50.80 At standard, each set of covers should require 5.6 yards of material. All of the materials purchased during the month were used in production. Per Set Total of Covers $45,600 $22.80 $49.000 24.50 $7,000 3.50 $50.80 Direct materials (12,000 yards) Direct labor Variable manufacturing overhead At standard, each set of covers should require 5.6 yards of material. All of the materials purcfiased during the month were used in production. Required Compute the following variances for August: 1. The materials price and quantity variances 2. The labor rate and efficiency variances. 3. The variable overhead rate and efficiency variances. Sharp Company manufactures a product for which the following standards have been set: Standard Quantity Standard Price Standard or Hours or Rate Cost $33 Direct materials Direct labor 3 feet $11 per foot ? hours? per hour During March, the company purchased direct materials at a cost of $111,300, all of which were used in the production of 3,200 units of product. In addition, 4,900 direct labor-hours were worked on the product during the month. The cost of this labor time was $95,550. The following variances have been computed for the month: $4,400 u $450 F $2.000 U Materials quantity variance Labor spending variance Labor efficiency variance Required. 1. For direct materials: a. Compute the actual cost per foot of materials for March. b. Compute the price variance and the spending variance 2. For direct labor: a. Compute the standard direct labor rate per hour. b. Compute the standard hours allowed for the month's production c. Compute the standard hours allowed per unit of product

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