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# Lovitz Company is planning to produce 2,000 units of product

### Resolved Question:

Lovitz Company is planning to produce 2,000 units of product in 2008. Each unit requires 3 pounds of materials at \$6 per pound and a half hour of labor at \$14 per hour. The overhead rate is 70% of direct labor.

Compute the budgeted amounts for 2008 for direct materials to be used, direct labor, and applied overhead.
Direct materials \$
Direct labor \$

Compute the standard cost of one unit of product.
\$

The standard cost of Product B manufactured by Mateo Company includes three units of direct materials at \$5.00 per unit. During June, 28,000 units of direct materials are purchased at a cost of \$4.70 per unit, and 28,000 units of direct materials are used to produce 9,000 units of Product B.

Compute the total materials variance and the price and quantity variances.
Total materials variance \$ UnfavorableFavorable
Materials price variance \$ FavorableUnfavorable
Materials quantity variance \$ FavorableUnfavorable

Repeat the question above, assuming the purchase price is \$5.20 and the quantity purchased and used is 26,200 units.
Total materials variance \$ FavorableUnfavorable
Materials price variance \$ UnfavorableFavorable
Materials quantity variance \$ FavorableUnfavorable

Scheer Company's standard labor cost of producing one unit of Product DD is 4 hours at the rate of \$12.00 per hour. During August, 40,800 hours of labor are incurred at a cost of \$12.10 per hour to produce 10,000 units of Product DD.

Compute the total labor variance.
\$ FavorableUnfavorable

Compute the labor price and quantity variances.
Labor price variance \$ FavorableUnfavorable
Labor quantity variance \$ UnfavorableFavorable

Repeat the previous question, assuming the standard is 4.2 hours of direct labor at \$12.25 per hour.
Labor price variance \$ FavorableUnfavorable
Labor quantity variance \$ UnfavorableFavorable

Jay Levitt Company produces one product, a putter called GO-Putter. Levitt uses a standard cost system and determines that it should take one hour of direct labor to produce one GO-Putter. The normal production capacity for this putter is 100,000 units per year. The total budgeted overhead at normal capacity is \$800,000 comprised of \$200,000 of variable costs and \$600,000 of fixed costs. Levitt applies overhead on the basis of direct labor hours.
During the current year, Levitt produced 90,000 putters, worked 94,000 direct labor hours, and incurred variable overhead costs of \$186,000 and fixed overhead costs of \$600,000.

Compute the predetermined variable overhead rate and the predetermined fixed overhead rate.

Compute the applied overhead for Levitt for the year.
\$

\$ UnfavorableFavorable

Putnam Corporation manufactures a single product. The standard cost per unit of product is shown below.
Direct materials-1 pound plastic at \$7.00 per pound \$ 7.00
Direct labor-1.5 hours at \$12.00 per hour 18.00

Total standard cost per unit \$40.00

The predetermined manufacturing overhead rate is \$10 per direct labor hour (\$15.00 ÷ 1.5). It was computed from a master manufacturing overhead budget based on normal production of 7,500 direct labor hours (5,000 units) for the month. The master budget showed total variable costs of \$56,250 (\$7.50 per hour) and total fixed overhead costs of \$18,750 (\$2.50 per hour). Actual costs for October in producing 4,900 units were as follows.

Direct materials (5,100 pounds) \$ 37,230
Direct labor (7,000 hours) 87,500

Total manufacturing costs \$200,580

The purchasing department buys the quantities of raw materials that are expected to be used in production each month. Raw materials inventories, therefore, can be ignored.

Compute all of the materials and labor variances.
Total materials variance \$ FavorableUnfavorable
Materials price variance \$ FavorableUnfavorable
Materials quantity variance \$ FavorableUnfavorable
Total labor variance \$ UnfavorableFavorable
Labor price variance \$ FavorableUnfavorable
Labor quantity variance \$ FavorableUnfavorable

\$ UnfavorableFavorable

Farm Labs, Inc. provides mad cow disease testing for both state and federal governmental agricultural agencies. Because the company's customers are governmental agencies, prices are strictly regulated. Therefore, Farm Labs must constantly monitor and control its testing costs. Shown below are the standard costs for a typical test.
Direct materials (2 test tubes @ \$1.50 per tube) \$3
Direct labor (1 hour @ \$25 per hour) 25
Variable overhead (1 hour @ \$5 per hour) 5
Fixed over
Submitted: 4 years ago.
Category: Homework
Expert:  Neo replied 4 years ago.

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Neo, Tutor
Category: Homework
Satisfied Customers: 12101
Experience: BS Accounting

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