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The Justice Corporation mass produces wooden chairs. The standard costs follow: Plastic                                                  10 pounds at $4.50 per pound. Molding                                                         3...

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Accounting

The Justice Corporation mass produceswooden chairs. The standard costs follow:

Plastic                                                10 pounds at $4.50 per pound.

Molding                                                       3 feet at $3.00 per foot.

Directlabor                                             4hours at $15.00 per hour.

Variable overhead                                       $3per direct labor hour.

Fixedoverhead                                        $.75 per direct labor hour.

                                The static budget called for 80,000 direct labor hours in June.

Transactions during June follow:

  • Justice purchased 200,000 pounds of plastic at $ 4.45 andissued 185,000 pounds to production.
  • Justice purchased 60,000 feet of molding at $3.10 per foot andissued 50,000 feet to production.
  • The direct labor payroll was 72,500 hours at $14.50.
  • Overhead costs were $275,000 of which $221,125 wasvariable.
  • Justice produced 18,000 chairs during the month.

                 Required:

  1. Compute the direct materials, direct labor,variable overhead, and fixed overhead variances that were discussedin class.
  2. Discuss the significance of thevariances.

Answer & Explanation Solved by verified expert
3.6 Ratings (383 Votes)
a Direct Materials Variances Plastic Direct materials price variance Standard price per unit Actual price x Quantity purchased 450 445 x 200000 10000 F Direct materials quantity variance Standard quantity allowed    See Answer
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