Question

Material, Labor, and Variable Overhead Variances The following summarized manufacturing data relate to Thomas Corporation's April 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 $34 $74,760 Direct material Standard (2 lb. @ $17.00/lb.) Actual (4,200 lb. @ $17.80/lb.) Direct labor Standard (0.5 hr. @ $32/hr.) Actual (950 hrs. @ $31/hr.) Variable overhead Standard (0.5 hr. @ $14/hr.) $16 29,450 $7 Actual 14,450 $118,660 Total $57

Answer 1

Answers

Material Variance
Actual Cost	$74,750
Split Cost	$71,400	4200 lbs x $ 17
Standard Cost	$68,000	20000 units x 2 lb x $ 17
Material Price Variance	$3,350	Unfavourable
Material Efficiency Variance	$3,400	Unfavourable, as Actual quatitity is MORE than Standard quantity

Labor Variance
Actual Cost	$29,450	950 x $ 31
Split Cost	$30,400	950 x $ 32
Standard Cost	$32,000	2000 units x 0.5 hr x $ 32
Labor rate Variance	$950	Favourable, as Actual rate is LESS than Standard rate
Labor Efficiency Variance	$1,600	Favourable, as Actual quatitity is LESS than Standard quantity

Variable Overhead Variance
Actual Cost	$14,450
Split Cost	$13,300	950 hrs x $ 14
Standard Cost	$14,000	2000 x 0.5hrs x $ 14
Labor rate Variance	$1,150	Unfavourable
Labor Efficiency Variance	$700	Favourable