Question

2. Compute the direct labor cost variance, including its rate and efficiency variances. Standard Cost Actual Cost $ $ 0 0 0 0

Answer 1

Solution 1:

Direct Material Cost Variance
Actual Cost					Standard cost for actual quantity					Standard Cost
AQ *	AP =				AQ *	SP =				SQ *	SP =
1499000	$6.30	$9,443,700.00			1499000	$5.10	$7,644,900.00			1512000	$5.10	$7,711,200.00
			$1,798,800.00	U				$66,300.00	F
			Direct Material Price Variance					Direct Material Qty variance
Direct material price variance					$1,798,800.00	U
Direct material quantity variance					$66,300.00	F
Direct material cost variance					$1,732,500.00	U

Solution 2:

Direct Labor Cost Variance
Actual Cost					Standard cost for actual quantity					Standard Cost
AH *	AR =				AH *	SR =				SH *	SR =
299400	$12.50	$3,742,500.00			299400	$15.00	$4,491,000.00			302400	$15.00	$4,536,000.00
			$748,500.00	F				$45,000.00	F
			Direct Labor rate Variance					Direct Labor Efficiency Variance
Direct Labor Rate variance					$748,500.00	F
Direct Labor Efficiency variance					$45,000.00	F
Direct labor cost variance					$793,500.00	F

Solution 3:

Controllable Variance
Actual overhead	$5,043,200.00
Budgeted overhead	$5,073,600.00
Controllable variance	$30,400.00	F

Fixed overhead volume variance
Budgeted fixed overhead	$2,956,800.00
Fixed overhead cost applied	$3,326,400.00
Fixed overhead volume variance	$369,600.00	F