Question

Rip Tide Company manufactures surfboards. Its standard cost Information follows: Standard Quantity 15 sq. ft. 18 hrs. Standard Price (Rate) $ 5 per sq. ft. $15 per hr. Standard Unit Cost $ 75.ee 150.ee Direct materials (Fiberglass) Direct labor Variable manufacturing overhead (based on direct labor hours) Fixed manufacturing overhead ($24, eee + 3e8 units) 10 hrs. $ 6 per hr. 60.ee 82.ee Rip Tide has the following actual results for the month of June: Number of units produced and sold Number of square feet of fiberglass used Cost of fiberglass used Number of labor hours worked Direct labor cost Variable overhead cost Fixed overhead cost 322 5,020 $28,614 3,160 $ 48,989 $15,790 $ 25, 120 Required: 1. Calculate the direct materials price, quantity, and total spending variances for Rip Tide. 2. Calculate the direct labor rate, efficiency, and total spending variances for Rip Tide. 3. Calculate the variable overhead rate, efficiency, and total spending variances for Rip Tide. 4. Calculate the fixed overhead spending (budget) and volume variances for Rip Tide.

Answer 1

(1) direct material price variance

(standard price - Actual price)*actual quantity

(5*5020)-(28614)

=3514 unfavorable[ as the actual cost is more than budgeted the variance is unfavorable]

(2) direct material quantity variance

(Standard quantity-actual quantity)*Standard price

(75$*322units)- (5020*5)

=24150-25100

=950 unfavorable

(3)direct material spending variance

standard quantity*standard price- actual quantity*actual price

=24150-28614

=4464 unfavorable

(4) direct labor rate variance

(standard rate-actual rate)*Actual hour

(15*3160)-(48980)

=47400-48980

=1580 unfavorable

(5)effeciency variance

(standard hour-Actual hour)*Standard rate

=(150*322)-(3160*15)

=48300-47400

=900 favorable

(6) labor spending variance

(Standard price*standard quantity)-(Actual price*actual quantity)

=(48300-48980)

=680 unfavorable

(7)variable overhead rate variance

(standard rate-actual rate)*actual hours

(6*3160)-(15790)

=3170 favorable

(8)variable overhead eficiency variance

(standard hour-actual hours)*standard rate

=(10*322*6)-(3160*6)

=19320-18960

=360 favorable

(9)spending variance

standard hour*standard rate-actual hour*actual rate

(10*322*6)-(15790)

=3530 favorable

(10)fixed overhead spending variance

Actual hours*standard cost - Actual hours*actual cost

[80*322]-[25100]

=25760-25100

=660 favorable

(11) fixed volume variance

[standard quantity*standard rate]-[actual quantity*standard rate]

[24000]-[25760]

=1760 unfavorable