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# Managerial accounting for Mountain Dew

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The standards for one case of Mountain Dew are:
Direct materials . . . . . . . . . . . . . . . . . . . . 6 lbs. @ \$ 5.00/ lb. \$ 30
Direct labor . . . . . . . . . . . . . . . . . . . . . . . 5 hrs. @ \$ 12.00/ hr. 60
Variable overhead ( based on direct labor hours). . . . . . . . . .. . . 5 hrs. @ \$ 6.00/ hr.= 30

During the week ended March 28, the following activity took place:
16,000 lbs. of raw materials were purchased for inventory at a cost of \$ 4.95 per pound.
2,500 cases of finished product were produced.
15,600 lbs. of raw materials were used.
12,200 direct labor hours were worked at a total cost of \$ 152,500.
\$ 76,860 of actual variable overhead costs were incurred.

Required: Calculate each of the following variances:
a. Price variance for raw materials purchased.
b. Raw materials usage variance.
c. Direct labor rate variance.
d. Direct labor efficiency variance.

#### Solution Preview

The standards for one case of Mountain Dew are:
Direct materials . . . . . . . . . . . . . . . . . . . . 6 lbs. @ \$ 5.00/ lb. \$ 30
Direct labor . . . . . . . . . . . . . . . . . . . . . . . 5 hrs. @ \$ 12.00/ hr. 60
Variable overhead (based on direct labor hours). . . . . . . . . .. . . 5 hrs. @ \$ 6.00/ hr.= 30
During the week ended March 28, the following activity took place:
16,000 lbs. of raw materials were purchased for inventory at a cost of \$ 4.95 per pound.
2,500 cases of finished product were produced.
15,600 lbs. of raw materials were used.
12,200 direct labor hours were worked at a total cost of \$ 152,500.
\$ 76,860 of actual variable overhead costs were incurred.

Required: Calculate each of the following ...

#### Solution Summary

Managerial accounting for Mountain Dew is provided. The direct hours worked for total costs are given.

\$2.19