(SOLVED) Madetoja Oy s job costing system has two direct cost categories direct materials


Question Description:

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Madetoja Oy’s job-costing system has two direct-cost categories: direct materials and direct manufacturing labour. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of standard direct manufacturing labour-hours (DLH). At the beginning of 2008, Madetoja adopted the following standards for its manufacturing costs:
The denominator level for total manufacturing overhead per month in 2008 is 40 000 direct manufacturing labour-hours. Madetoja’s flexible budget for January 2008 was based on this denominator level. The records for January indicate the following:
Direct materials purchased……………………….. 25 000 kg at €5.20 per kg
Direct materials used ……………………………. 23 100 kg
Direct manufacturing labour 40 100 hours at €14.60 per hour
Total actual manufacturing overhead
(variable and fixed)……………………………… €600000
Actual production 7800 output units
Required
1. Prepare a schedule of total standard manufacturing costs for the 7800 output units in January 2008.
2. For the month of January 2008, calculate the following variances, indicating whether each is favourable (F) or unfavourable (U):
a. Direct materials price variance, based on purchases
b. Direct materials efficiency variance
c. Direct manufacturing labour price variance
d. Direct manufacturing labour efficiency variance e Total manufacturing overhead spending variance
f. Variable manufacturing overhead efficiency variance g Production-volume variance.

Answer

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