Baldwin company make cabinets.one model,the Deluxe,has the followinh requirements.
Materials 40 feet of wood at birr 1.20 per foot
Direct labour 4 hours at birr 7 per hour
Variable overhead Birr5 per direct labour hour
During june 199x4, the company made 1,200 deluxe cabinates.operating results were as follows.
Materials purchased[58,000feet atbirr 1.15] birr 66,700
Materials used 51,200 feet
Direct labour[4,750 hours at birr 7.10] birr 33,725
Variable overhead birr 23,900
1,compute the standard variable cost per deluxe cabinate
2,compute the material price variancy.
pleas tele me the answer
To compute the standard variable cost per deluxe cabinet, we need to calculate the total variable cost and then divide it by the number of cabinets produced.
1. Calculate the total variable cost:
The total variable cost includes the cost of materials, direct labor, and variable overhead.
Cost of materials:
40 feet of wood at birr 1.20 per foot per cabinet
Total material cost per cabinet = 40 feet * birr 1.20 = birr 48
Direct labor:
4 hours at birr 7 per hour per cabinet
Total direct labor cost per cabinet = 4 hours * birr 7 = birr 28
Variable overhead:
5 birr per direct labor hour per cabinet
Total variable overhead cost per cabinet = 5 birr/hour * 4 hours = birr 20
Total variable cost per cabinet = Material cost + Direct labor cost + Variable overhead cost
= birr 48 + birr 28 + birr 20
= birr 96
2. Compute the material price variance:
Material price variance measures the difference between the actual cost of materials and the standard cost of materials per unit.
Actual materials cost = Materials purchased - Materials used
= birr 66,700 - birr 51,200
= birr 15,500
Standard materials cost = Materials used * Standard cost per foot
= 51,200 feet * birr 1.20
= birr 61,440
Material price variance = Actual materials cost - Standard materials cost
= birr 15,500 - birr 61,440
= - birr 45,940
The material price variance is - birr 45,940, indicating that the actual cost of materials per foot is lower than the standard cost per foot.
Therefore:
1. The standard variable cost per deluxe cabinet is birr 96.
2. The material price variance is - birr 45,940.