1. Sparingly Manufacturing has developed the following standards for one of its products. STANDARD VARIABLE COST CARD for One Unit of Product Materials: 5 yards @ $6 per yard = $30.00 Direct labor: 2 hours @ $8 per hour = $16.00 Variable manufacturing overhead: 2 hours @ $5 per hour = $10.00 Total standard variable cost per unit $56.00 The company records materials price variances at the time of purchase. The following activity occurred during the month of December: Materials purchased: 5,200 yards costing $29,900 Materials used: 4,750 yards Units produced: 1,000 units Direct labor: 2,100 hours costing $17,850
Required:
a. Calculate the direct materials price variance.
b. Calculate the direct materials usage variance.
c. Calculate the direct labor rate variance.
d. Calculate the direct labor efficiency variance.
2. The variable costing income statement for Vamonos Company for 2014 is as follows:
Sales (5,000 units) $100,000
Variable expenses:
Cost of goods sold $30,000
Selling (10% of sales) 10,000 40,000
Contribution margin $ 60,000
Fixed expenses:
Manufacturing overhead $24,000
Administrative 14,400 38,400
Operating income $ 21,600
Selected data for 2014 concerning the operations of the company are as follows:
Beginning inventory -0- units
Units produced 8,000 units
Manufacturing costs:
Direct labor $3.00 per unit
Direct materials 1.60 per unit
Variable overhead 1.40 per unit
Required: Prepare an absorption costing income statement for 2014.