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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.
e. Variable overhead spending variance.
f. Variable overhead efficiency variance.

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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
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