sparingly manufacturing and vamonos company correct w solutions 501156

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.