Question

Rogen uses the standard cost system. The Static original budgeted production was 5,000 units for October. The Input standards were: Std Quantity x Std Price per input =Std Cost per Output U- Direct materials 1 lb./Output unit x $7/1b. = $7 per output unit Direct labor 1.6 hrs. /Output unit x $12/hr. = $19.20 per unit Variable manufacturing (Mfg.] overhead 1.6 hrs. x $7.50 per hr = $12 per unit- Fixed mfg. overhead [Budget $20,000] 1.6 hrs.. x $2.50 per hr = $4 per unit It Applied the standard costs to Actual Production throughout the period. As of the end of the period, a Flexible budget was prepared, to compute Production volume variance, and the Quantity Usage efficiency variances for Material and Labor actual usages separately. When Actual Costs are known a couple months later, it retroactively calculated Material Purchase Price and Labor Rate (or Price] variances; and Overhead Controllable variances. Rogen gathered the following actual results for October: Actual Units produced 4,800+ Direct materials purchased and used (5,100 lbs.) $36,720- Direct labor cost (7,400 hours actual) $92,500+ Manufacturing overhead costs incurred: Variable $59,700 and Fixed $21,000.-

Q5. What is the direct material efficiency variance? _________ Show calculation below.

Q6.     Given the info above, what is the direct labor rate variance? _________ Show calculation below.

Q7. Given the info above, the fixed overhead controllable variance is: _________ Show calculation below.

Q8. What is the variable overhead controllable variance? _________ Show calculation below.

Answer 1

Solution 5:

direct material efficiency variance = (SQ - AQ) *SP = (4800 - 5100)*$7 = $2,100 U

Solution 6:

Actual rate of labor = $92,500 / 7400 = $12.50 per hour

Direct labor rate variance = (SR - AR) * AH = ($12 - $12.50) * 7400 = $3,700 U

solution 7:

fixed overhead controllable variance = Budgeted fixed overhead - Actual fixed overhead = $20,000 - $21,000 = $1,000 U

Solution 8:

Variable overhead controllable variance = Standard cost of variable overhead - Actual cost of variable overhead

= (4800*$12) - $59,700 = $2,100 U