Sweetwater Company manufactures two products Mountain Mist a

Sweetwater Company manufactures two products, Mountain Mist and Valley Stream. The company prepares its master budget on the basis of standard costs The following data are for March: Direct materials Direct labor Variable overhead (per direct labor-hour) Fixed overhead (per month) Expected activity (direct labor-hours) 3 ounces at $14.60 per ounce 5 hours at $60.40 per hour 548 5370.640 6.560 4 ounces at $17.20 per ounce 6 hours at $80 per hour $53.40 $399,360 7,800 Actual results Direct material (purchased and used) Direct labor Variable overhead Fixed overhead Units produced (actual) 4,000 ounces at $14.40 per ounce 4,990 hours at $63.00 per hour 5263.550 $325.950 1,090 units 4500 ounces at $19.50 per ounce 7,500 hours at $8460 per hour $387,510 $399,300 1.240 units Required a. Compute a variance analysis for each variable cost for each product. (Do not round intermediate calculations. Indicate the effect of each variance by selecting \"F\" for favorable, or \"U\" for unfavorable. If there is no effect, do not select either option.) Direct materials Direct labor b. Compute a fixed overhead variance analysis for each product. (Do not round intermediate calculations. Indicate the effect of each variance by selecting \"F\" for favorable, or \"U\" for unfavorable. If there is no effect, do not select either option.) Price Variance Price Variance Foued overhead

Solution

Answer a. Mountain Mist: Actual Direct Material Flexible Budget Standard Cost AQ AR Total AQ SR Total SQ SR Total                                 4,100            13.50                  55,350                  4,100              14.50                59,450                  3,300         14.50                47,850            4,100.00            11,600.00 Direct Material Price Variance            4,100.00 (F) Direct Material Quantity Variance          11,600.00 (U) Total Direct Material Variance            7,500.00 (U) Actual Direct Labor Flexible Budget Standard Cost AH AR Total AH SR Total SH SR Total                                 5,000            63.25               316,250                  5,000              60.50              302,500                  5,500         60.50              332,750          13,750.00            30,250.00 Direct Labor RAte Variance          13,750.00 (U) Direct Labor Efficiency Variance          30,250.00 (F) Total Direct Labor Variance          16,500.00 (F) Actual Variable Overhead Flexible Budget Standard Cost AH AR Total AH SR Total SH SR Total                                 5,000            53.31               266,550                  5,000              48.00              240,000                  5,500         48.00              264,000          26,550.00            24,000.00 Variable Overhead Rate Variance          26,550.00 (U) Variable Overhead Efficiency Variance          24,000.00 (F) Total Variable Overheadr Variance            2,550.00 (U) Valley Stream: Actual Direct Material Flexible Budget Standard Cost AQ AR Total AQ SR Total SQ SR Total                                 4,600            19.75                  90,850                  4,600              17.30                79,580                  4,800         17.30                83,040          11,270.00              3,460.00 Direct Material Price Variance          11,270.00 (U) Direct Material Quantity Variance            3,460.00 (F) Total Direct Material Variance            7,810.00 (U) Actual Direct Labor Flexible Budget Standard Cost AH AR Total AH SR Total SH SR Total                                 7,510            85.60               642,856                  7,510              81.00              608,310                  7,200         81.00              583,200          34,546.00            25,110.00 Direct Labor RAte Variance          34,546.00 (U) Direct Labor Efficiency Variance          25,110.00 (U) Total Direct Labor Variance          59,656.00 (U) Actual Variable Overhead Flexible Budget Standard Cost AH AR Total AH SR Total SH SR Total                                 7,510            51.73               388,510                  7,510              53.50              401,785                  7,200         53.50              385,200          13,275.00            16,585.00 Variable Overhead Rate Variance          13,275.00 (F) Variable Overhead Efficiency Variance          16,585.00 (U) Total Variable Overhead Variance            3,310.00 (U) Mountain Mist Valley Stream Price Variance Efficiency Variance Price Variance Efficiency Variance Direct Material      4,100.00 (F)          11,600.00 (U)        4,100.00 (F)              3,460.00 (F) Direct Labor    13,750.00 (U)          30,250.00 (F)      34,546.00 (U)            25,110.00 (U) Variable Overhead    26,550.00 (U)          24,000.00 (F)      13,275.00 (F)            16,585.00 (U) Answer b. Mountain Mist: Actual Budget Applied                       325,950.00         370,640.00        310,750.00    44,690.00          59,890.00 Fixed Overhead Rate Variance          44,690.00 (F) Fixed Overhead Production Volume Variance          59,890.00 (U) Valley Stream Actual Budget Applied                       399,300.00         399,360.00        368,640.00            60.00          30,720.00 Fixed Overhead Rate Variance                  60.00 (F) Fixed Overhead Production Volume Variance          30,720.00 (U) Mountain Mist Valley Stream Price Variance Production Volume Variance Price Variance Production Volume Variance Fixed Overhead    44,690.00 (F)          59,890.00 (U)              60.00 (F)            30,720.00 (U)