Question

Problem (25 points). Versailles Company produces a product that relies on a standard cost system for planning and control. The following are the standands for producing one unit of product. VERSAILLES COMPANY STANDARDS FOR PRODUCTION OF ONE UNIT OF PRODUCT Standard Quantity of Imput Standard Price of Input Standard Cost. Per Unit Direct Materials. 10.00 S 3 units 30.00 Direct Labor 1.0 hours 8.00 8.00 1.0 bours Variable Manufacturing Overhead 5.00 5,00 Fixed Manufacturing Overhead 1.0 hours 20.00 20.00 During the period, the company recorded the attached activity in connection with the production of its product. VERSAILLES COMPANY ACTUAL ACTIVITY FOR PRODUCTION DURING PERIOD The company purchased 10,000 units of direct materials at a total cost of $108,000. The (a) company used 8,900 units of direct materials in producing the product. A total of 2,800 hours of direct labor were recorded at an average actual rate of $8.75 per (b) hour. The company actually produced 3,000 units of output during the year. (c) The actual variable manufacturing overhead incurred was $17,500 and the actual fixedi (d) (e) The company calculated its manufacturing overhead rates using a normal capacity of 3,500 direct labor hours. manufacturing overhead incurred was $61,200.

i would appreciate if it was done in a chart method and formula method if possible. thank you

Answer 1

1]	Direct materials price variance = Actual quantity purchased*(Actual price-Standard price) = 10000*(10.80-10) =	$            8,000	Unfavorable
2]	Direct materials quantity variance = Standard price*(Actual quantity used-Standard quantity) = 10*(8900-3000*3) =	$            1,000	Favorable
3]	Direct labor rate variance = Actual hours*(Actual rate-Standard rate) = 2800*(8.75-8) =	$            2,100	Unfavorable
4]	Direct labor efficiency variance = Standard rate*(Actual hours-Standard hours) = 8*(2800-3000*1) =	$            1,600	Favorable
5]	Variable MOH spending variance = Actual overhead-Actual hours*Standard VOH rate = 17500-2800*5 =	$            3,500	Unfavorable
6]	Variable MOH efficiency variance = Standard VOH rate*(Actual hours-Standard hours) = 5*(2800-3000*1) =	$            1,000	Favorable
7]	Fixed MOH spending variance = Actual overhead-Budgeted overhead = 61200-3500*20 =	$            8,800	Favorable
8]	Fixed MOH volume variance = Budgeted overhead-Overhead applied = 3500*20-3000*1*20 =	$         10,000	Unfavorable