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 Direct labor hours 14,800 15,200 Manufacturing overhead incurred $202,600 Manufacturing overhead applied $205,200 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.

Compute all of the variances for (1) direct materials and (2) direct labor. (Round per unit values to 2 decimal places, e.g. 52.75 and final answers to 0 decimal places, e.g. 52.) (1) Total materials variance $ FavorableUnfavorableNeither favorable nor unfavorable Materials price variance $ FavorableUnfavorableNeither favorable nor unfavorable Materials quantity variance $ FavorableUnfavorableNeither favorable nor unfavorable (2) Total labor variance $ FavorableUnfavorableNeither favorable nor unfavorable Labor price variance $ FavorableUnfavorableNeither favorable nor unfavorable Labor quantity variance $ FavorableUnfavorableNeither favorable nor unfavorable

Answer 1

Solution

Total Material Variance	$           2,870.00	Unfavourable-U
Material Price Variance	$           1,110.00	Unfavourable-U
Material quantity variance	$           1,760.00	Unfavourable-U
Total Labor variance	$           6,040.00	Unfavourable-U
Labor rate variance	$         10,360.00	Unfavourable-U
Labor Efficiency variance	$           4,320.00	Favourable-F

Working

Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$                    2.20	-	$                     2.30	)	x	11100
	-1110
	Variance		$             1,110.00			Unfavourable-U
Material Quantity Variance
(	Standard Quantity	-	Actual Quantity	)	x	Standard Rate
(	10300	-	11100	)	x	$              2.20
	-1760
	Variance		$             1,760.00			Unfavourable-U
Material Spending Variance
(	Standard Cost	-	Actual Cost	)
(	$         22,660.00	-	$           25,530.00	)
	-2870
	Variance		$             2,870.00			Unfavourable-U

.

Labor Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                  10.80	-	$                   11.50	)	x	14800
	-10360
	Variance		$           10,360.00			Unfavourable-U
Labour Efficiency Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	15200	-	14800	)	x	$           10.80
	4320
	Variance		$             4,320.00			Favourable-F
Labor Spending Variance
(	Standard Cost	-	Actual Cost	)
(	$       164,160.00	-	$        170,200.00	)
	-6040
	Variance		$             6,040.00			Unfavourable-U