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(Solution) - Jackson Corporation manufactures one product Beta for which it has

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Jackson Corporation manufactures one product, Beta, for which it has developed the following standard cost per unit:
Direct materials (3 kg. at $4 per kg) .................................... $12.00
Direct labor (1/2 hr. at $11 per hour) .................................... 5.50
Variable overhead ($6 per direct labor hour) ........................... 3.00
Fixed overhead ($8 per direct labor hour) .............................. 4.00
Standard cost per unit of Beta produced .............................. $24.50
Materials are added at the beginning of the process. Inspection takes place at the end of the process and spoilage is considered to be abnormal. Actual activity for November is as follows:
(a) Budgeted fixed factory overhead for the month was $80,000.
(b) There were 4,000 units in process on November 1 and they were 20% complete as to conversion costs.
(c) 60 000 kg. of materials were purchased at a unit cost of $3.95. The materials price variance is determined at the date the materials are purchased.
(d) 16,000 units of product were started during November.
(e) 50 000 kg. of materials were issued to production.
(f) The direct labor payroll was $108,000 for 9,000 hours.
(g) 17,000 units of product were transferred to finished goods inventory.
(h) There were 2,150 units in process on November 30 and they were 40% complete as to conversion costs.
(i) Actual factory overhead totaled $134,900.
Required:
(1) Compute equivalent units for materials and conversion costs.
(2) Compute the purchase price and quantity variances for materials, the rate and efficiency variances for labor, and reconcile the overall factory overhead variance using the three-variance method, (spending, variable efficiency, and volume variances). Indicate whether the variances are favorable or unfavorable.

 







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