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Peaceful Corporation manufactures figurines based on the following information.
| Standard costs |
$20 |
|
| Materials (4 ounces at $5) |
$8 |
|
| Direct labor (1 hour per unit) |
$4 |
|
| Variable overhead (based on direct labor hours) |
|
|
| Fixed overhead budget |
|
$19,000 |
| Actual results and costs |
|
|
| Materials purchased |
|
|
| Units |
9,000 |
|
| Cost |
$39,600 |
|
| Materials used in production |
|
|
| Finished product units |
2,000 |
|
| Raw material (ounces) |
8,200 |
|
| Direct labor hours |
2,000 |
|
| Direct labor cost |
$20,000 |
|
| Variable overhead costs |
$5,980 |
|
| Fixed overhead costs |
$19,500 |
|
Required:
- Prepare a performance report for Peaceful using the following headings.
- Actual Production Costs
- Flexible Budget Costs
- Flexible Budget Variances
- Compute the following variances (show calculations).
- Materials usage variance
- Labor rate variance
- Labor efficiency variance
- Variable overhead spending variance
- Variable overhead efficiency variance
- Fixed overhead budget variance
- Give one possible explanation for each of the six variances computed in part b.
