Question

Pharoah Corporation accumulates the following data relative to jobs started and finished during the month of June 2020. Costs and Production Data Actual Standard Raw materials unit cost $2.30 $2.20 Raw materials units 11,100 10,300 Direct labor payroll $170,200 $164,160 15,200 Direct labor hours 14,800 $202.600 Manufacturing overhead incurred $205,200 Manufacturing overhead applied Machine hours expected to be used at normal capacity 43,500 Budgeted fixed overhead for June $65,250 Variable overhead rate per machine hour $3.00 Fixed overhead rate per machine hour $1.50 Overhead is applied on the basis of standard machine hours. 3.00 hours of machine time are required for each direct labor hour. The jobs were sold for $460,000. Selling and administrative expenses were $42,100. Assume that the amount of raw materials purchased equaled the amount used.

Answer 1

Material price variance =			(Standard Price - Actual Price) x Actual Quantity
		=	($ 2.20 - $ 2.30) x 11100
		=	$ 1,110.00	(U)
Material quan. Variance =			(Standard Quantity - Actual Quantity) x Standard Price
		=	(10300 - 11100) x $ 2.20
		=	$ 1,760.00	(U)
Total material variance =			Standard Cost - Actual Cost
		=	($ 2.20 x 10300) - ($ 2.30 x 11100)
		=	$ 2,870.00	(U)

Labor price variance =			(Standard Price - Actual Price) x Actual Hours
		=	($ 10.8 - $ 11.5) x 14800
		=	$ 10,360.00	(U)
Materials quan. Variance =			(Standard Hours - Actual Hours) x Standard Price
		=	(15200 - 14800) x $ 10.8
		=	$   4,320.00	(F)
Total labor variance =			Standard Cost - Actual Cost
		=	$ 164160 - $ 170200
		=	$   6,040.00	(U)