Question

The following summarized manufacturing data relate to Thomas Corporation's April operations, during which 2,000 finished units of product were produced. Normal monthly capacity is 1,100 direct labor hours.

			Standard Units Costs			Total Actual Costs
Direct material
Standard (2 lb. @ $11.00/lb.)			$22
Actual (4,200 lb. @ $12.00/lb.)					$50,400
Direct labor
Standard (0.5 hr. @ $26/hr.)			$13
Actual (950 hrs. @ $25.20/hr.)					23,940
Variable overhead
Standard (0.5 hr. @ $8/hr.)			$4
Actual			-		8,450
Total			$39		$82,790

Determine the following variances:

Do not use negative signs with any of your answers. Next to each variance answer, select either "F" for Favorable or "U" for Unfavorable.

Materials Variances
Actual cost:	Answer
Split cost:	Answer
Standard cost:	Answer
Materials price	Answer	AnswerFU
Materials efficiency	Answer	AnswerFU

Labor Variances
Actual cost:	Answer
Split cost:	Answer
Standard cost:	Answer
Labor rate	Answer	AnswerFU
Labor efficiency	Answer	AnswerFU

Variable Overhead Variances
Actual cost:	Answer
Split cost:	Answer
Standard cost:	Answer
Variable overhead spending	Answer	AnswerFU
Variable overhead efficiency	Answer	AnswerFU

Please answer all parts of the question.

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Answer 1

Solution:

1.) Materials variance

Actual cost:	$12
Split cost:
Standard cost:	$11
Materials price	$4,200($12 - $11= $1× 4,200)	Unfavorable
Materials efficiency	200(4,200 - 4,000)	Unfavorable

2.) Labor variance

Actual cost:	$25.20
Split cost:
Standard cost:	$26.00
Labor rate	$760 ($26 - $25.20 = 0.80 ×950 hrs)	favorable due to 80% savings
Labor efficiency	$1,300(1,000 hrs. -950 hrs. =50 × $26)	favorable

3.) Variable overhead variance

Actual cost:	not given
Split cost:
Standard cost	$8
Variable overhead spending:	$850(950 hrs.×$8) ($8,450 - $7,600)	Favorable
Variable overhead efficiency:	$400(1,000 hrs.-950 hrs.)× $8	favorable

*

2000 × units ×2lb. =4,000lb

0.50 hrs. ×2000 =1,000 hrs.