Question

NU Elticiency Variances Simon Company had the following information ng information available: Budgeted Costs The budget was to manufacture and sell 5,- ufacture and sell 5,200 units Direct Materials: 4 pounds per unit @ $2.00 per po Direct Labor: 1.5 hours per units @ $15 per nou $2.00 per pound and had the following costs: Direct Materials: 19.500 pounds that cost $41,480 Direct Labor: 8,000 hours that cost $118,900 Required 1. Calculate the amount actually spent on direct materials 2. Calculate the flexible budget for direct materials 3. Calculate the amount of the flexible budget for direct mater 4. Is the flexible budget variance for direct materials favorable of urn 5. Calculate the amount of the price variance for direct materiais. b. If the price variance on direct materials favorable or unfavorable? 7. Calculate the amount of the efficiency variance on direct materials 8. Is the efficiency variance on direct materials favorable or unfavorable 9. Calculate the flexible budget variances for direct materials and direct labor TIL ALLin hudent for direct materials

Answer 1

Answer with working notes is given below

1 Amount actually spent on direct material $41,480 T 20,000 Pounds | 2 Flexible budget for material - 5000 units X 4 pounds | $40,000|| 3 Amount of flexible budget amount for material 5000 units X 4 pounds x $2 4 Flexible budget variance Flexible Variance Actual Variance Budget | Туре $40,000 $41,480 $1,480 Unfavourable 5 price variance for material Standard price per pound Actual price per pound Actual quantity price variance for material (Actual price - Standard price) * Actual quantity $2.00 $2.13($41,480/19,500) 19,500 $2,480 Unfavourable 6 Price variance is Unfavourable because actual price is higher than standard price 7 Efficiency variance Standard material for actual - 5,000 X 4 Actual quantity of material used Standard price per pound (Actual quantity - Standard quantity) * standard price 20,000 19,500 -$1,000 Favourable 8 Efficiency variance on direct material is favourable because actual quantity is lower than standard allowed quantity Flexible Budget $40,000 $112,500 Actual $41,480 $118,900 Variance variance Type $1,480 Unfavourable $6,400 Unfavourable Material Labor Flexible budget for labor = 5,000 X 1.50 X $15