|
Riley Labs produces various chemicalcompounds for industrial use. One compound, called Lundor, isprepared using an elaborate distilling process. The company hasdeveloped standard costs for one unit of Lundor as follows: |
|
Standard |
Standard Price or |
Standard |
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|
Direct materials |
2.0 |
ounces |
$ |
22.00 |
per ounce |
$ |
44.00 |
|
Direct labor |
1.3 |
hours |
$ |
12.00 |
per hour |
15.60 |
|
|
Variable manufacturing overhead |
1.3 |
hours |
$ |
3.00 |
per hour |
3.90 |
|
|
$ |
63.50 |
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During November,the following activity was recorded by the company relative toproduction of Lundor: |
| a. | Materials purchased, 19,000 ouncesat a cost of $358,150. |
| b. | There was no beginning inventoryof materials; however, at the end of the month, 15,700 ounces ofmaterial remained in ending inventory. |
| c. | The company employs 11 labtechnicians to work on the production of Lundor. During November,each worked an average of 174 hours at an average rate of $10.30per hour. |
| d. | Variable manufacturing overhead isassigned to Lundor on the basis of direct labor hours. Variablemanufacturing overhead costs during November totaled $4,976. |
| e. | During November, 1,520 good unitsof Lundor were produced. |
|
Compute thevariable overhead spending and efficiency variances. |
|
Variable overhead spending variance |
$ |
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|
Variable overhead efficiency variance |
$ |
Accounting