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    The Gallo Company Uses A Flexible Budget and Standard Costs

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    Amit Pandey
    The Gallo Company uses a flexible budget and standard costs to aid planning and control of its manufacturing operations. It has two variable direct cost categories (materials and labor) and two overhead categories (variable and fixed overhead). In August, there were variances for direct materials price and efficiency, variable overhead flexible budget and efficiency, and labor efficiency. Labor unrest increased wages, causing more variances. Gallo controls variable overhead differently from fixed overhead.

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    The Gallo Company Uses A Flexible Budget and Standard Costs

    Uploaded by

    Amit Pandey
    45 views2 pages
    The Gallo Company uses a flexible budget and standard costs to aid planning and control of its manufacturing operations. It has two variable direct cost categories (materials and labor) and two overhead categories (variable and fixed overhead). In August, there were variances for direct materials price and efficiency, variable overhead flexible budget and efficiency, and labor efficiency. Labor unrest increased wages, causing more variances. Gallo controls variable overhead differently from fixed overhead.

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    The Gallo Company Uses a Flexible Budget and Standard Costs

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    The Gallo Company uses a flexible budget and standard costs to aid planning and control of its manufacturing operations. It has two variable direct cost categories (materials and labor) and two overhead categories (variable and fixed overhead). In August, there were variances for direct materials price and efficiency, variable overhead flexible budget and efficiency, and labor efficiency. Labor unrest increased wages, causing more variances. Gallo controls variable overhead differently from fixed overhead.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    45 views2 pages

    The Gallo Company Uses A Flexible Budget and Standard Costs

    Uploaded by

    Amit Pandey
    The Gallo Company uses a flexible budget and standard costs to aid planning and control of its manufacturing operations. It has two variable direct cost categories (materials and labor) and two overhead categories (variable and fixed overhead). In August, there were variances for direct materials price and efficiency, variable overhead flexible budget and efficiency, and labor efficiency. Labor unrest increased wages, causing more variances. Gallo controls variable overhead differently from fixed overhead.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
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    Solved: The Gallo Company uses a flexible budget and

    standard costs
    The Gallo Company uses a flexible budget and standard costs

    The Gallo Company uses a flexible budget and standard costs to aid planning and control of its
    machining manufacturing operations. Its costing system for manufacturing has two direct-cost
    categories (direct materials and direct manufacturing labor—both variable) and two overhead-
    cost categories (variable manufacturing overhead and fixed manufacturing overhead, both
    allocated using direct manufacturing labor-hours).
    At the 50,000 budgeted direct manufacturing labor-hour level for August, budgeted direct
    manufacturing labor is $ 1,250,000, budgeted variable manufacturing overhead is $ 500,000,
    and budgeted fixed manufacturing overhead is $ 1,000,000.
    The following actual results are for August:
    Direct materials price variance (based on purchases) ...... $ 179,300 F
    Direct materials efficiency variance ............ 75,900 U
    Direct manufacturing labor costs incurred ........... 535,500
    Variable manufacturing overhead flexible-budget variance ... 10,400 U
    Variable manufacturing overhead efficiency variance ..... 18,100 U
    Fixed manufacturing overhead incurred ........... 957,550
    The standard cost per pound of direct materials is $ 11.50. The standard allowance is 6 pounds
    of direct materials for each unit of product. During August, 20,000 units of product were
    produced. There was no beginning inventory of direct materials. There was no beginning or
    ending work in process. In August, the direct materials price variance was $ 1.10 per pound.
    In July, labor unrest caused a major slowdown in the pace of production, resulting in an
    unfavorable direct manufacturing labor efficiency variance of $ 40,000. There was no direct
    manufacturing labor price vari-ance. Labor unrest persisted into August. Some workers quit.
    Their replacements had to be hired at higher wage rates, which had to be extended to all
    workers. The actual average wage rate in August exceeded the standard average wage rate by
    $ 0.50 per hour.

    Required
    1. Compute the following for August:
    a. Total pounds of direct materials purchased
    b. Total number of pounds of excess direct materials used
    c. Variable manufacturing overhead spending variance
    d. Total number of actual direct manufacturing labor-hours used
    e. Total number of standard direct manufacturing labor-hours allowed for the units produced
    f. Production-volume variance
    2. Describe how Gallo’s control of variable manufacturing overhead items differs from its
    control of fixed manufacturing overhead items.

    Reach out to freelance2040@yahoo.com for enquiry.


    The Gallo Company uses a flexible budget and standard costs

    ANSWER
    https://solvedquest.com/the-gallo-company-uses-a-flexible-budget-and-standard-costs/

    Reach out to freelance2040@yahoo.com for enquiry.


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