Question

The following summarized manufacturing data relate to Brown Corp's May Operations, during which 2,000 finished units of product were produced. Normal capacity is 1,100 direct labor hours. Determine the following variances:

U MIYUUSIHESSesurse.com/platform/mod/quiz/attempt.pl E Business Course Return to course Question 1 Incomplete answer Marked out of 21.00 P Flag question Material, Labor, and Variable Overhead Variances The following summarized manufactur Standard Units Costs Total Actual Costs Direct material Standard (3 lb. @ $7.00/lb.) Actual (6,400 lb. @ $7.20/lb.) $46,080 Direct labor Standard (0.5 hr. @ $19/hr.) $9.50 Actual (950 hrs. @ $18.70/hr) 17,765 Variable overhead Standard (0.5 hr. @ 59/hr.) $4.50 Actual 9.300 Total $35 $73,145 Determine the following variances: Do not use negative signs with any of your answers, Next to each variance answer, select either" Materials Variances Actual cost $ 46,080 Split cost $ 44,800 Standard cost: 5 42,000 Materials price. S Materials efficiency Labor Variances Actual cost Split.costs Standard cost Labor rate Labor efficiency S Variable Overhead Variances cast: Split cost

Answer 1

Materials Variances Actual cost Split cost Standard cost Materials price Materials efficiency $46,080 $44,800 $42,000 $1,280 (UF) $2,800 (UF)

Labor Variances Actual cost Split cost Standard cost Labor rate Labor efficiency $17,765 $18,050 $19,000 $285 (F) $950 (F)

Variable Overhead Variances Actual cost Split cost Standard cost Variable overhead spending Variable overhead efficiency $9,300 $8,550 $9,000 $750 (UF) $450 (F)

The various computations are shown below:

Material variances

Actual cost=Actual quantity*actual price=6,400*$7.20=$46,080

Split cost=Actual quantity*standard price=6,400*$7.00=$44,800

Standard cost=Standard quantity *standard price=(3*2000)*(7)=$42,000

Direct material price variance=Actual quantity*(Actual price-standard price)

Direct material price variance=6,400*($7.20-$7.00)=$1,280 (UF)

Direct material efficiency variance=Standard price*(Actual quantity-standard quantity)

Direct material efficiency variance=$7.00*($6,400-$6,000)

Direct material efficiency variance=$2,800 (UF)

Labor variances

Actual cost =Actual hours*Actual rate= 950 hours*$18.70=$17,765

Split cost=Actual hours*standard rate=950 hours*$19=$18,050

Standard cost=Standard hours*standard rate=(0.5*2000)*$19=1000 hours*$19=$19,000

Labor rate variance=Actual hours*(Actual rate-standard rate)

Labor rate variance=950 hours*($18.70-$19)

Labor rate variance=$285(F)

Labor efficiency variance=Standard rate*(Actual hours-standard hours)

Labor efficiency variance=$19*(950 hours-1000 hours)

Labor efficiency variance=950(F)

Variable overhead variances

Actual cost =$9,300

Split cost=Actual hours*standard rate=950*$9=$8,550

Standard cost=Standard hours*standard rate=1000*$9=$9,000

Variable overhead spending variance=Actual cost-split cost

Variable overhead spending variance=9,300-$8,550=$750(UF)

Variable overhead efficiency variance=Standard cost-split cost

Variable overhead efficiency variance=$9,000-$8,550=$450(F)