Question

The standard cost sheet for Chambers Company, which manufactures one product, follows:
   

Direct materials, 30 yards at $2.50 per yard	$	75
Direct labor, 4 hours at $25 per hour		100
Factory overhead applied at 80% of direct labor		80
(variable costs = $60; fixed costs = $20)
Variable selling and administrative		67
Fixed selling and administrative		43
Total unit costs	$	365

  
Standards have been computed based on a master budget activity level of 29,100 direct labor-hours per month. Actual activity for the past month was as follows:  
  

Materials used		231,000	yards at $2.60 per yard
Direct labor		28,900	hours at $26.00 per hour
Total factory overhead	$	670,000
Production		7,100	units

Required:

Prepare variance analyses for the variable and fixed costs. Materials are purchased as they are used. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)

	Direct materials: Price variance    Efficiency variance Direct labor: Price variance Efficiency variance Variable overhead: Efficiency variance Fixed overhead: Production volume variance

Thank You for your time and help!

Answer 1

Solution 1 Standard Price Actual Price Standard Quantity (30 yards x 7100) Actual Quantity 2.50 2.60 213000 yards 231000 yards Material Price Variance (Actual Price - Standard Price) x Actual Quantity ($2.60 - $2.50) x 231000 yards $0.10 x 231000 yards $ 23,100.00 Unfavourable Material Quantity Variance (Actual Quantity - Standard Quantity) x Standard Price (231000 - 213000) < $2.50 18000 x $2.50 $ 45,000.00 Unfavourable Solution 2 Standard Rate per hour Actual Rate per hour Standard hours (7100 units x 4 hours) Actual hours $ 25.00 per hour 26.00 per hour 28400 hours 28900 hours Labor rate Variance (Actual Rate - Standard Rate) x Actual hours worked ($26 - $25) x 28900 hours $1.00 x 28900 $ 28,900.00 Unfavourable Labor Efficiency Variance (Actual hours - Standard hours) x Standard rate (28900 - 28400) $25.00 500 x $25.00 $ 12,500.00 Unfavourable

Factory Variable overheads Variable selling & admin Ohs Total Variable Overheads (budgeted) Number of hours for 1 unit product Standard Variable overheads per hour $ 60.00 67.00 127.00 per unit 4 hours 31.75 per hour $ Variable Overhead Efficiency Variance = (Standard hours - Actual hours ) x Standard Variable overhead rate per hour (28400 -28900) x $31.75 500 x $31.75 $ 15,875.00 Unfavourable (a) Total Standard hours Standard hours per unit No of Budgeted Units (b) (a/b) 29100 hours 4 hours 7275 units = $ Fixed factory Overheads Fixed selling & admin Ohs Total Budgeted Fixed Overheads 20.00 43.00 63.00 per unit $ Fixed Manufacturing Overhead Volume Variance = (Actual Units produced - Budgeted units) x Budgeted fixed overhead per unit (7100 - 7275) x $63.00 175 x $63.00 $ 11,025.00 Favourable

In case of any doubt, please comment below