Brahma manufactures western hats. The company prepares flexible budgets and uses a standard cost system to control manufacturing costs. The following standard unit cost of a hat is based on the static budget volume of 20,000 hats per month:
| Direct materials (2.5 m2 × $5.00 per m2) | $12.00 |
| Direct labour (2 hours × $15 per hour) | 30.00 |
Manufacturing overhead:
| Variable (2 hours × $2.50 per hour) | $5.00 |
| Fixed (2 hours × $3.75 per hour) | 7.50 | 12.50 |
Data for January of the current year include the following:
| a. | Actual production was 18,000 hats. |
| b. | Actual direct materials purchased and used was 2.70 m2 per hat at an actual cost of $5.30 per |
m
2.
| c. | Actual direct labour usage of 38,500 hours cost $539,000. |
| d. | Total actual overhead cost was $240,000. |
Required:
| 1. | Compute the price and efficiency variances for direct materials and direct labour. |
| 2. | For manufacturing overhead, compute the total variance, the flexible budget variance, and the |
production volume variance.
A nurse prepares a client for anesthesia and surgery.
Western pygmy possum
Most of the world’s remaining gorillas are western lowland gorillas.
Does It Cost More to Eat Healthy?
Flexible exchange rates are supposed to prevent long-term trade deficits.