Question

Material, Labor, and Variable Overhead Variances The following summarized manufacturing data relate to Kiosse Corporation's May operations, during which 2,000 finished units of product were produced. Normal monthly capacity is 1,100 direct labor hours. Standard Units Costs Total Actual Costs Direct material $6 Standard (3 lb. @ $2.00/lb.) Actual (6,200 lb. @ $2.20/lb.) Direct labor $13,640 $7 Standard (0.5 hr. @ $14/hr.) Actual (980 hrs. @ $13.70/hr.) Variable overhead 13,426 Standard (0.5 hr. @ $4/hr.) Actual 4,200 $31,266 Total $15 Assume that the 6,200 lb. of materials purchased were all used in producing the 2,000 completed units. Determine the materials price and efficiency variances, labor rate and efficiency variances, and variable overhead spending and efficiency variances. Do not use negative signs with any of your answers. Next to each variance answer, select either "F" for Favorable or "U" for Unfavorable.

Answer 1

Materials Variance 2 Actual cost $ 13,640 3 Split Cost $ 12,400 4 Standard cost $ 12,000 5 Material price $ 1,240 V 6 Material Efficiency $ 400 U 7 8 Labor variances 9 Actual cost $ 13,426 10 Split Cost $ 13,720 11 Standard cost $ 14,000 12 Labor rate $ 294 F 13 Labor Efficiency $ 280 F 14 15 Variable overhead varainces 16 Actual cost $ 4,200 17 Split Cost $ 2920 18 Standard cost $ 4,000 19 Variable overhead rate $ 280 20 Variable Overhead Efficiency $ 80 F

Materials Variance 2 Actual cost 13640 3 Split Cost =6200*2 4 Standard cost =2000*3*2 5 Material price =+B2-B3 6 Material Efficiency =+B3-B4 7 8 Labor variances 9 Actual cost 13426 10 Split Cost =980*14 11 Standard cost =2000*0.5*14 12 Labor rate =+B10-B9 13 Labor Efficiency =+B11-B10 14 Variable overhead varainces 16 Actual cost 4200 17 Split Cost =980*4 18 Standard cost =2000*0.5*4 19 Variable overhead rate =+B16-B17 20 Variable Overhead Efficiency =+B18-B17 15

Material Variances: Actual price per lb is more than standard price per lb, so unfavorable price variance. Actual quantity used is more than the standard quantity allowed, so unafavorable efficiency variance. Labor Variances: Actual rate per hour is less than standard rate per hour, so favorable price variance. Actual hours are less than standard hours, so favorable price variance. Variable overhead variances: Actual rate per hour is more than standard rate per hour, so unfavorable price variance. Actual hours are less than standard hours, so favorable price variance.