Standard costing question - pls help me
This query is : Resolved
14 January 2011
Ardmore Enterprises uses a standard cost system in its small appliance division. The standard cost of manufacturing one unit of Zeb is as follows.
Materials – 60 pounds at $1.50 per pound $90
Labor – 3 hours at $12 per hour $36
Factory overhead – 3 hours at $ 8 per hour $24
Total standard cost per unit $150
The budgeted variable factory overhead rate is $3 per labor hour, and the budgeted fixed factory overhead is $27,000 per month. During May, Ardmore produced 1,650 units of Zeb compared to a normal capacity of 1,800 units. The actual cost per unit was as follows.
Materials – 58 pounds at $1.65 per pound $95.7
Labor – 3.1 hours at $12 per hour $37.2
Factory overhead – $39930 per 1650 units $24.20
Total standard cost per unit $157.10
What is flexible budget overhead variance for May ?
Correct Answer is $1,920 favorable.
I am getting the answer 330 unfavourable arrived as under
Actual F. oh : 39930
Actual qty * std. rate = 1650*24 = 39600
Difference of above two = 330 unfavourable
Please anyone help me solve this problem to arrive at correct answer of 1920 favourable.
Materials – 60 pounds at $1.50 per pound $90
Labor – 3 hours at $12 per hour $36
Factory overhead – 3 hours at $ 8 per hour $24
Total standard cost per unit $150
The budgeted variable factory overhead rate is $3 per labor hour, and the budgeted fixed factory overhead is $27,000 per month. During May, Ardmore produced 1,650 units of Zeb compared to a normal capacity of 1,800 units. The actual cost per unit was as follows.
Materials – 58 pounds at $1.65 per pound $95.7
Labor – 3.1 hours at $12 per hour $37.2
Factory overhead – $39930 per 1650 units $24.20
Total standard cost per unit $157.10
What is flexible budget overhead variance for May ?
Correct Answer is $1,920 favorable.
I am getting the answer 330 unfavourable arrived as under
Actual F. oh : 39930
Actual qty * std. rate = 1650*24 = 39600
Difference of above two = 330 unfavourable
Please anyone help me solve this problem to arrive at correct answer of 1920 favourable.
17 January 2011
I am closing this thread as I got the answer from Mr.Nishant in Caclubindia.com forum.
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