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

The Starr Company has established a standard cost systemfor the manufacture of a single consumer product, which is brandedunder the name Vinbit. The standard costs of producing one Vinbitare shown below:

Standard Cost Card:

Direct Materials: 20 pounds @ $.30 $6.00

Direct Labor: 3 hours @ $15.00 $45.00

At the beginning of the year, Starr Company establisheda monthly flexible overhead budget as follows:

Flexible Overhead Budget:

Variable Charges - $.60 per direct laborhour

Fixed Charges - $6,000.00 per month

Budgeted Volume – 15,000 direct labor hours

The costs of operations to produce 4,500 Vinbits duringMay are stated below (there were no initialinventories):

Actual Costs:

Materials purchased: 120,000 pounds @ $.31$37,200

Materials used: 105,000 pounds

Direct Labor: 13,750 hours @ $15.10$207,625

Variable overhead incurred $8,500

Fixed overhead incurred $6,000

Required:

Starr Company’s overhead is applied through the use ofdirect labor hours as the single cost driver. Utilizing this costdriver, what is the amount of budgeted volume, standard volume andactual volume?

Prepare a calculation of the overhead efficiency, volumeand spending variances for the month of May.

The Starr Company has established a standard cost systemfor the manufacture of a single consumer product, which is brandedunder the name Vinbit. The standard costs of producing one Vinbitare shown below:

Standard Cost Card:

Direct Materials: 20 pounds @ $.30 $6.00

Direct Labor: 3 hours @ $15.00 $45.00

At the beginning of the year, Starr Company establisheda monthly flexible overhead budget as follows:

Flexible Overhead Budget:

Variable Charges - $.60 per direct laborhour

Fixed Charges - $6,000.00 per month

Budgeted Volume – 15,000 direct labor hours

The costs of operations to produce 4,500 Vinbits duringMay are stated below (there were no initialinventories):

Actual Costs:

Materials purchased: 120,000 pounds @ $.31$37,200

Materials used: 105,000 pounds

Direct Labor: 13,750 hours @ $15.10$207,625

Variable overhead incurred $8,500

Fixed overhead incurred $6,000

Required:

Starr Company’s overhead is applied through the use ofdirect labor hours as the single cost driver. Utilizing this costdriver, what is the amount of budgeted volume, standard volume andactual volume?

Prepare a calculation of the overhead efficiency, volumeand spending variances for the month of May.

The Starr Company has established a standard cost systemfor the manufacture of a single consumer product, which is brandedunder the name Vinbit. The standard costs of producing one Vinbitare shown below:

Standard Cost Card:

Direct Materials: 20 pounds @ $.30 $6.00

Direct Labor: 3 hours @$15.00 $45.00

At the beginning of the year, Starr Company establisheda monthly flexible overhead budget as follows:

Flexible Overhead Budget:

Variable Charges - $.60 per direct laborhour

Fixed Charges - $5,000.00 per month

Budgeted Volume – 10,000 direct laborhours

The costs of operations to produce 4,500 Vinbits duringMay are stated below (there were no initialinventories):

Actual Costs:

Materials purchased: 110,000 pounds @$.31 $34,100

Materials used: 105,000 pounds

Direct Labor: 13,750 hours @$15.20 $209,000

Variable overheadincurred $8,500

Fixed overheadincurred $6,000

1. Starr Company’s overhead is applied through the useof direct labor hours as the single cost driver. Utilizing thiscost driver, what is the amount of budgeted volume, standard volumeand actual volume?

2. Prepare a calculation of the overhead efficiency,volume and spending variances for the month of May.