Wonderful Not only did our salespeople do a good job in meeting the sales budget this year, but our production people did a good job in controlling costs as well, said Kim Clark, president of Martell Company. ?oOur $18,300 overall manufacturing cost variance is only 1.2% of the $1,536,000 standard cost of products made during the year. That’s well within the 3% parameter set by management for acceptable variances. It looks like everyone will be in line for a bonus this year.??
The company produces and sells a single product. The standard cost card for the product follows:
The following additional information is available for the year just completed:
(a) The company manufactured 30,000 units of product during the year.
(b) A total of 64,000 feet of material was purchased during the year at a cost of $8.55 per foot. All of this material was used to manufacture the 30,000 units. There were no beginnings or ending inventories for the year.
(c) The company worked 43,500 direct labor-hours during the year at a direct labor cost of $15.80 per hour.
(d) Overhead is applied to products on the basis of standard direct labor-hours. Data relating to manufacturing overhead costsfollow: