Algers Company_Standard Costing_Variance Analysis



Algers Company produces
dry fertilizer. At the beginning of the year, Algers had the following standard
cost sheet:

Direct materials (5lbs.
@ $2.60) $13.00

Direct Labor (0.75 hr @
$18.00) 13.50

Fixed overhead (0.75 hr
@ $4.00) 3.00

Variable overhead (0.75
hr @ $3.00) 2.25

Standard cost per unit

Algers computers is
overhead rates using practical volume, which is 54,000 units. The actual
results for the year are as follows:

a. Units produced:

b. Direct materials
purchased: 274,000 pounds at $2.50 per pound

c. Direct materials
used: 270,300 pounds

d. Direct labor: 40,100
hours at $17.95 per hour

e. Fixed overhead:

f. Variable overhead:


1. Compute price and
usage variances for direct materials.

2. Compute the direct labor
rate and labor efficiency variances.

3. Compute the fixed
overhead spending and volume variances. Intercept the volume variance.

4. Compute the variable
overhead spending and efficiency varainces.

5. Prepare journal
entries for the following:

a. The purchase of
direct materials

b. The issurance of
direct materials to production (Work in Process)

c. The addition of
direct labor to Work in Process

d. The addition of
overhead to Work in Process

e. The incurrence of
actual overhead costs

f. Closing out of variances
to Cost of Goods Sold


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