Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The plant has been...

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Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The plant has been experiencing problems as sh a. Purchased 60,000 pounds of materials at a cost of $4.95 per pound. b. Used 49,200 pounds of materials in production. (Fini

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Answer 1

Answer #1

1)
a.Direct materials price and quantity variances.

Direct Material Price
Material Price Variance = ( AP − SP ) × AQ
Standard unit price of direct material (SP)	5
Actual price per unit of direct material (AP)	$ 4.95
Actual quantity of direct material used(AQ)	60000
Material Price Variance = ( $4.95 - $5 ) × 49200	3000	F

Material Quantity Variance = ( AQ − SQ ) × SP
Standard unit price of direct material (SP)	5
Standard quantity allowed (SQ) (15000 pools x 3 pounds)	45000
Actual quantity of direct material used (AQ)	49200
Material quantity Variance - (49,200 - 45,000) x $5	21000	UF

b. Labor rate and efficiency variances.
Labor Rate Variance = ( AR − SR ) × AH
Standard direct labor rate SR	$ 16.00
Actual direct labor rate AR =	$ 17.00
Actual direct labor hour AH	11800
Labor Rate Variance = ( $17 − $16 ) × 11800	11800	UF

Labor Efficiency Variance = ( AH − SH ) × SR
Standard direct labor rate SR	$ 16.00
Standard direct labor hours allowed SH(15000 x 0.8 hours)	12000
Actual direct labor hour AH	11800
Labour Efficiency Variance = (11800 - 12000) x $16	3200	F

c. Variable overhead rate and efficiency variances.
Variable Overhead Rate
Variable overhead Rate Variance = ( AR − SR ) × AH
Standard Variable manufacturing overhead rate SR	$ 3.00
Actual Variable manufacturing overhead rate AR =$18290/5900	$ 3.10
Actual Variable manufacturing overhead hour AH	5900
Variable Overhead Rate Variance = ( $3.10 − $3 ) × 5900	590	UF

Efficiency Variance = ( AH −SH ) × SR
Standard Variable manufacturing overhead rate SR	$ 3.00
Standard Variable manufacturing overhead hours allowed SH(15000 x 0.4 hours)	6000
Actual Variable manufacturing overhead hour AH	5900
Efficiency Variance = (5900 - 6000) x $3	300	F

b)
Summary of variances:
Material quantity variance	21000	UF
Material price variance	3000	F
Labor efficiency variance	3200	F
Labor rate variance	11800	UF
Variable overhead efficiency variance	300	F
Variable overhead rate variance	590	UF
Net variance	26890	UF

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