Manufacturing Variances
Prepare a cost variance analysis for the variable costs at Delmar Products.
Part 5 Scenario
Delmar Products prepares its budgets on the basis of standard costs. A responsibility report is prepared monthly, showing the differences between master budget and actual results. Variances are analyzed and reported separately. There are no materials inventories.
The following information relates to the current period.
Delmar Products: Information for the Current Period
Item
Value
Standard Costs (Per Unit of Output)
Direct Materials (6 gallons @ $4.00 per gallon)
$24
Direct Labor (4 hours @ $40 per hour)
$160
Factory Overhead
Variable (25% of direct labor cost)
$40
Total Standard Cost Per Unit
$224
Actual costs and activities for the month follow:
Delmar Products: Actual Costs and Activities for the Month
Item
Value
Materials Used
15,120 gallons at $3.60 per gallon
Output
2,280 units
Actual Labor Costs
6,400 hours at $44 per hour
Actual Variable Overhead
$72,900
Complete the following:
Prepare a cost variance analysis for the variable costs.
Competencies Measured
By successfully completing this assessment, you will demonstrate your proficiency in the course competencies through the following assessment scoring guide criteria:
- Competency 4: Utilize cost accounting data to evaluate management control systems.
- Explain plan incentives and determine the relevancy of the plan.
- Prepare budgeted income statement and balance sheet.
- Demonstrate financial performance analysis.
- Prepare a flexible budget.
- Prepare a variance analysis of direct materials, direct labor, and overhead.
- Competency 5: Communicate in a manner that is professional and consistent with expectations for professionals in the field of accounting.
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