Acct344 Cost Accounting: Week 7 Problem 1. Peaceful Corporation

Acct344 Cost Accounting Week 7 Problem 1: Peaceful Corporation manufactures figurines based on the following information. Standard costs - Materials (4 ounces at $5) $20 Direct labor (1 hour per unit) $8 Variable overhead (based on direct labor hours) $4 Fixed overhead budget $19,000 Actual results and costs - Materials purchased: Units 9,000 Cost $39,600 Materials used in production Finished product units 2,000 Raw material (ounces) 8,200 Direct labor hours 2,000 Direct labor cost $20,000 Variable overhead costs $5,980 Fixed overhead costs $19,500 Required: 1. Prepare a performance report for Peaceful using the following headings. a. Actual Production Costs b. Flexible Budget Costs c. Flexible Budget Variances 2. Compute the following variances (show calculations). a. Materials usage variance b. Labor rate variance c. Labor efficiency variance d. Variable overhead spending variance e. Variable overhead efficiency variance f. Fixed overhead budget variance 3. Give one possible explanation for each of the six variances computed in part b.