| There is only one problem this week on manufacturing variance. |
| Apollo Sports manufacturers fabric tents. The poles are purchased from a vendor, so the only part manufactured is the actual fabric tent. |
| The company uses a standard cost system based on manufacturing 5,000 tents per month. Overhead is applied on a per-unit basis. In May, |
| 4,840 tents were produced. Management has a policy that all variances greater than 3% from standard should be investigated. Standard and |
| actual costs are listed below: |
| | Standard |
| Direct material | 18 yards at $3.25 per yard |
| Direct labor | 6.5 hours at $15.00 per hour |
| Overhead applied | $12.00 per tent |
| | Actual |
| Direct material | 86,550 yards at $3.50 per yard |
| Direct labor | 32,100 hours at $15.75 per hour |
| Actual overhead | $56,700 |
| Instructions: |
| 1. Compute the total, price, and quantity variances for both materials and labor. |
| State if each variance is favorable or unfavorable. |
| 2. Compute the total, volume, and budget overhead variances. State if favorable |
| or unfavorable. |
| 3. Prepare journal entries for the application of overhead, the actual overhead, |
| and to record variances and close the overhead account. Note that on the actual |
| overhead, you will not have individual expense account amount, so just list |
| "various" for the expense accounts. |
| 4. Always label all of your work. |
| SOLUTION: |
Ernesto Sabato
week_7_homework_problems.xlsx
