Question

Question 16 Blomdahl Corporation makes a product with the following standard costs: Inputs Standard Quantity/Hours Standard Price/Rate Direct Materials 5.5 kilos $8.00 per kilo Direct Labor 0.5 Hours $21.00 per hour Variable Overhead 0.5 Hour $5.00 per hour The company reported the following results concerning this product in October 7,500 units 41,100 kilos 2,800 hours Actual Output Purchase of raw materials Actual direct labor-hours Raw materials used in production Cost of raw materials Cost of direct labor Actual variable overhead rate 43,500 kilos $339,075 Total $53,900 Total $2.35 per hour The materials price variance is recognized when materials are purchased. Variable overhead is applied on the basis of direct labor hours. Required (Answers should not include commas nor negative signs. Answers should be in the format 4000 F or 4000 U): . Compute the materials quantity variance. . Compute the materials price variance. . Compute the labor efficiency variance. . Compute the direct labor rate variance. .Compute the variable overhead efficiency variance, .Compute the variable overhead rate variance.

Answer 1

Solution:

Material quantity variance = (SQ - AQ) *SP = (7500*5.50 - 43500) * $8 = $18,000 U

Material price variance = (SP - AP)*AQ Purchased = ($8 - $339,075/41100) * 41100 = $10,275 U

Direct Labor Cost Variance
Actual Cost					Standard cost for actual quantity					Standard Cost
AH *	AR =				AH *	SR =				SH *	SR =
2800	$19.25	$53,900.00			2800	$21.00	$58,800.00			3750	$21.00	$78,750.00
			$4,900.00	F				$19,950.00	F
			Direct Labor rate Variance					Direct Labor Efficiency Variance
Direct Labor Rate variance					$4,900.00	F
Direct Labor Efficiency variance					$19,950.00	F

Variable Overhead Cost Variance
Actual Cost					Standard cost for actual quantity					Standard Cost
AH *	AR =				AH *	SR =				SH *	SR =
2800	$2.35	$6,580.00			2800	$5.00	$14,000.00			3750	$5.00	$18,750.00
			$7,420.00	F				$4,750.00	F
			Variable overhead rate variance					Variable overhead efficiency variance
Variable overhead rate variance					$7,420.00	F
Variable overhead efficiency variance					$4,750.00	F