Question

Koontz Company manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May. Actual Standard Cost per Unit Cost per Unit Direct materials: Standard: 1.90 feet at $4.60 per foot Actual: 1.85 feet at $5.00 per foot Direct labor: S 8.74 $9.25 Standard: 0.95 hours at $19.00 per hour Actual: 1.00 hours at $18.50 per hour Variable overhead: 18.05 18.50 Standard: 0.95 hours at $7.00 per hour Actual: 1.00 hours at $6.60 per hour 6.65 6.60 $33.44 $34.35 Total cost per unit $0.91 Excess of actual cost over standard cost per unit The production superintendent was pleased when he saw this report and commented: "This $0.91 excess cost is well within the 4 percent limit management has set for acceptable variances. It's obvious that there's not much to worry about with this product. Actual production for the month was 19,000 units. Variable overhead cost is assigned to products on the basis of direct labor-hours. There were no beginning or ending inventories of materials.

correct answers only please!

Answer 1

Material Price Variance = (Standard Price – Actual Price)*Actual Quantity

= (4.60-5)*19000*1.85

= $14,060 U

Material Quantity Variance = (Standard Quantity – Actual Quantity)*Standard Price

= (1.90-1.85)*19,000*4.60

= $4370 F

b.Labor Rate variance = (Standard Rate – Actual Rate)*Actual Hours

= (19-18.50)*1*19000

= $9500 F

Efficiency = (Standard Hours – Actual Hours)*Standard Rate

= (0.95-1)*19,000*19

= $18,050 U

c.Variable overhead Rate Variance = (Standard Rate – Actual Rate)*Actual Hours

=(7-6.6)*19,000*1

= $7600 F

Efficiency = (0.95-1)*19000*7

= $6,650 U

2.Direct Material Price = 14060/19000 = $0.74 U

Quantity = $0.23 F

Total = 0.51 U

Labor Rate = 0.5 F

Efficiency = 0.95 U

Total = 0.45 U

Variable overhead Rate = 0.4 F

Efficiency= 0.35 U

Total = 0.91 U

3.

Excess of actual over standard = 0.91

portion due to inefficiency

Labor efficiency variance = 0.95 U

Variable overhead efficiency variance = 0.35 U

Total = 1.3 U

Portion due to other variances = 0.39 F