Solution Library

Calculate Cost Variance And Fixed Overhead Variance Analysis

Question

Met Towels plc. produces and sells standard bath towels. The company uses a standard costing system; the standards in use for the latest month of production (January 2005) are as follows:

Direct Material Usage

1.5 m2 of material per towel

Direct Material Cost

£2 / m2

Direct Labor Usage

0.1 hour per towel

Direct Labor Cost

£7.50 / hour

Machine Hours Usage

3 minutes per towel

For the month of January 2005, the company expected to produce 100,000 towels and use £240,000 in variable overhead and £155,000 in fixed overhead. The costing system applies VOH using machine hours and FOH using direct labor hours.

At the end of January 2005, the company actually produced 100,000 towels. Additional actual information is as follows:

Direct Material Used

135,000 m2 (amount used = amount purchased)

Direct Material Cost

£276,750

Direct Labor Hours

11,500 hours

Direct Labor Cost

£94,990

Machine Hours Used

290,000 minutes

Variable Overhead

£249,400

Fixed Overhead

£140,000

Required: Prepare a full cost variance analysis for Met Towels in January 2005.

Required:

  1. Prepare a cost variance analysis for each variable cost component for Met Towels in January 2005.
  2. Prepare a fixed overhead variance analysis for Met Towels in January 2005.

 

Summary

The question belongs to Accounting and it discusses about calculation of cost variance analysis for variable cost component and fixed overhead variance analysis.

Total Word Count 261

Download Full Solution

Comments

  • HWA
    Rasha

    this is a very good website

  • HWA
    maani

    I have 50 questions for the same test your page is showing only 28

  • HWA
    joeanne

    hi can you please help or guide me to answer my assignments. thanks

  • HWA
    joeanne

    hi can anyone help or guide me to my assignments. thanks

  • HWA
    Monik


  • HWA
    Cristina

    This solution is perfect ...thanks

  • HWA
    Janete

    Hello Allison,I love the 2nd image that you did! I also, had never heard of SumoPaint, is something that I will have to exolpre a bit! I understand completely the 52 (or so) youtube videos that you probably watched. Sometimes they have what you want, sometimes they don't! However, it is always satisfying when you are able to produce something that you have taught yourself. Great job!Debra 0 likes

  • HWA
    Sandeep

    Perfect bank of solution. 

  • HWA
    Oxana

    great !

  • HWA
    Paul Brandon-Fritzius

    thanks for the quick response. the solution looks good. :)

  • HWA
    tina Johnson

    thnx for the answer. it was perfect. just the way i wanted it. 

  • HWA
    Giuseppe

    works fine.