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

Standard Quantity or Hours 3.1 pounds 0.4 hours 0.3 hours. Direct materials Direct labor Variable manufacturing overhead Tota

business accounting

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Answer 1

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Answer #1

(1)

(A)

Material price variance = actual quantity purchased x (standard price - actual price)

= 17400 x ($2.10 - $2.55)

= $7830 Unfavorable

(B)

Material quantity variance = standard price x (standard quantity - actual quantity used)

= $2.10 x (12400 - 12200)

= $420 Favorable

Where,

Standard quantity = actual output x standard quantity per unit of output

= 4000 x 3.1 = 12400 pounds

(2)

(A)

Labor rate variance = actual hours x (standard rate - actual rate)

= 2200 x ($6.10 - $5.80)

= $660 Favorable

(B)

Labor efficiency variance = standard rate x (standard hours - actual hours)

= $6.10 x (1600 - 2200)

= $3660 Unfavorable

Where,

Standard hours = actual output x standard hours per unit of output

= 4000 x 0.4 = 1600 hours

(3)

(A)

Variable overhead spending variance = actual hours x (standard rate - actual rate)

= 1500 x ($1.60 - $2)

= $600 Unfavorable

Where,

Actual rate = actual variable overhead/actual hours

= $3000/1500 = $2

(B)

Variable overhead efficiency variance = standard rate x (standard hours - actual hours)

= $1.60 x (1200 - 1500)

= $480 Unfavorable

Where,

Standard hours = actual output x standard hours per unit of output

= 4000 x 0.3 = 1200 hours

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Answer 2

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