During May, Arrow purchased 160,000 pounds of direct materials at a total cost of $304,000. The total factory wages for May were $42,000, 90 percent of which were for direct labor. Arrow manufactured 19,000 units of product during May using 142,500 pounds of direct material and 5,000 direct labor hours.a. Calculate the direct materials price variance for May.b. Calculate the direct materials quantity variance for May.c. Calculate the direct labor wage rate variance for May.d. Calculate the direct labor efficiency variance for May.HTML Editor9. The Tippa Canoe Company makes fiberglass canoes. The fiberglass resin is initially molded to the shape of a canoe, then sanded and painted. Metal or wooden seats and frames are added for stability. The Tippa Canoe Company was started several years ago in the owner’s garage. The owner, Jeff George, did a lot of the initial manual labor with the help of a few friends. The company has since expanded into a large warehouse and new employees have been hired. Because of the expansion, Jeff is no longer directly involved with production and is concerned about his ability to plan for and control the company. He is considering the implementation of a standard cost system.a. Describe the procedures Jeff should use in setting standards for direct labor and direct materials.b. Describe how Jeff could use standards for planning purposes,c. Describe how Jeff could use standards for motivating employees and problems in using standards as performance measures.d. Why are some of Jeff’s friends who worked with from the beginning not very excited about a change to a standard cost system?HTML Editor10. Derf Company applies overhead on the basis of direct labor hours. Two direct labor hours are required for each product unit. Planned production for the period was set at 9,000 units. Manufacturing overhead for the period is budgeted at $135,000, of which 20 percent is fixed. The 17,200 hours worked during the period resulted in production of 8,500 units. Manufacturing overhead cost incurred was $136,500.Calculate the following three overhead variances:a. Overhead volume variance.b. Overhead efficiency variance.c. Overhead spending variance.a. Overhead volume variance = (fixed overhead budget + variable overhead x standard volume) – overhead rate x standard volume……flexible budget at standard volume – overhead absorbed….unfavorable $1,500b. overhead efficiency variance= (foh + voh x av) – (foh + voh x sv)…..flexible budget at actual volume – flexible budget standard volume….unfavorable $1,200c. overhead spending variance = aoh – (foh + voh x av)….. actual overhead cost incured – flexible budget at actual volume…unfavorable $6,300HTML EditorShow more
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