abmalhi80

abmalhi80

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Abdullah malhiAmerican University

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English1Business3Accounting2Biology2Statistics1Physics5
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The Brilliant Furniture Company has established standard costs for the cabinet department in which one size of a single four-drawer style if dresser is produced. The standard costs are used in evaluating actual performance. The standard costs of producing one of these dressers are shown below: Direct material: Lumber –50 board feet @ Br. 5 = Br. 250 Direct labour : 3hours @ Br. 24 = 72 Factory over head: Variable costs :3 hours @ Br. 10 = 30 Fixed costs : 3hours @ Br. 20 = 60 Total per dresser Br. 412 The actual costs of operations to produce 400 of these dressers during January are as follows (there were no initial inventories) Direct material purchased: 25000 board feet @5.60 = Br. 140,000 Direct material used: 19000 board feet Direct labour: 1,100 hours @ Br. 22 = 24,200 Factory over head: Variable costs = 12,760 Fixed costs = 29,800 The flexible budget for this department at the monthly volume level used to set the budgeted fixed –overhead rate called for 1,400 direct labour hours of operation.

At this level, the variable overhead was at Br. 14,000 and the fixed overhead at Br. 28,000. Required: compute the following variances from standard cost. Label your answers favorable (F) or unfavorable (U).

1. Direct material price variance, isolated at time of purchase

2. Direct material quantity variance

3. (a) Direct labour price variance

    (b) Direct labour efficiency variance

4. (a) Variable –over head flexible budget variance

    (b) Fixed –over head spending (flexible budget) variance

    (c) Fixed –overhead production volume variance

5. (a) Variable –over head spending variance

    (b) Variable –over head efficiency variance

Answer: Direct material price variance, isolated at time of purchase: Actual c...
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