Assignment:
One of your clients, Moore Manufacturing has asked you to assist them in evaluating their performance against their budgets. The management of Moore Manufacturing has provided the following standard cost sheet for one of its products:
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Direct Materials
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6 lb @ $2 per pound
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$12
|
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Direct Labor
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3 hrs @ $25 per hr
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$75
|
|
Variable factor overhead
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2 hrs @ $4 per hour
|
$8
|
|
Fixed factory overhead
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2 hr @ $15 per hour
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$30
|
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Cost per unit
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$125
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Moore Manufacturing applies factory overhead based on direct labor hours and factory overhead is allocated based on a practical capacity of 500 units of product.
The actual operating results for the year are as follows:
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Units manufactured
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400
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Direct materials purchased and used
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1,800 pounds
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$19,800
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|
Direct labor incurred
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750 hours
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20,250
|
|
Variable factory overhead incurred
|
|
5,000
|
|
Fixed factory overhead incurred
|
|
15,800
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1. Determine the following for the period:
a. Flexible budget for variable overhead based on output for the period
b. Total variable overhead applied to production during the period
c. Total budgeted fixed factory overhead
d. Total fixed factory overhead applied to production during the period
Calculate the following variances using four-variance analysis:
Total variable overhead variance
a. Variable overhead spending variance
b. Variable overhead efficiency variance
c. Total under applied or over applied variable overhead
d. Fixed overhead spending variance
e. Production volume variance
f. Total fixed overhead variance
g. Total under applied or over applied fixed overhead
Calculate the following variances using three-variance analysis:
Factory overhead spending variance
a. Factory overhead efficiency variance
b. Production volume variance
Calculate the total overhead flexible budget variance and the production volume variance using a two-variance analysis. (in excel file).
2. Prepare a 12-15 slides presentation for the management team at Moore Manufacturing explaining the variances and evaluating their performance.