Question

Material, Labor, and Variable Overhead Variances The following summarized manufacturing data relate to Steffan Corporation's April operations, during which 2,000 finished units of product were produced. Normal monthly capacity is 1,100 direct labor hours. Standard Units Costs Total Actual Costs Direct material Standard (2 lb. @ $9.50/lb.) $19 Actual (4,200 lb. @ $10.20/lb.) $42,840 Direct labor Standard (0.5 hr. @ $24/hr.) $12 Actual (970 hrs. @ $23.40/hr.) 22,698 Variable overhead Standard (0.5 hr. @ $6/hr.) $3 6,200 Actual $34 $71,738 Total

Answer 1

Answer

Material Variance
Actual Cost	$42,840
Split Cost	$39,900	4200 lbs x $ 9.5
Standard Cost	$38,000	2000 units x 2lb x $9.5
Material Price Variance	$2,940	Unfavourable, as Actual rate is MORE than Standard rate
Material Efficiency Variance	$1,900	Unfavourable, as Actual quatitity is MORE than Standard quantity

Labor Variance
Actual Cost	$22,698
Split Cost	$23,280	970 hrs x $24
Standard Cost	$24,000	2000 units x 0.5hrs x $24
Labor rate Variance	$582	Favourable, as Actual rate is LESS than Standard rate
Labor Efficiency Variance	$720	Favourable, as Actual quatitity is LESS than Standard quantity

Variable Overhead Variance
Actual Cost	$6,200
Split Cost	$5,820	970 hrs x $ 6
Standard Cost	$6,000	2000 units x $ 3
Labor rate Variance	$380	Unfavourable
Labor Efficiency Variance	$180	Favourable