Question

managerial accounting, please help

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

Answer 1

Direct material price variance = Actual quantity * (Standard price-Actual price)

Direct material price variance = 10,000 * ($10 - $108,000/10,000) = $8,000 Unfavorable

Direct material quantity variance = Standard price * (Standard quantity-Actual quantity)

Standard quantity = 3,000*3 = 9,000

Direct material quantity variance = $10 * (9,000-8,900) = $1,000 Favorable

Direct labor rate variance = Actual hours * (Standard rate-Actual rate)

Direct labor rate variance = 2,800 * ($8-8.75) = $2,100 Unfavorable

Direct labor efficiency variance = Standard rate * (Standard hours-Actual hours)

Standard hours = 3,000*1 = 3,000 hours

Direct labor efficiency variance = $8 * (3,000 - 2,800) = $1,600 Favorable