Question

Vitex, Inc. manufactures a popular consumer product and it has provided the following data excerpts from its standard cost system: Inputs Direct materials Direct labor Variable manufacturing overhead Total standard cost per unit (1) Standard Quantity or Hours 2.10 pounds 1.00 hours 1.00 hours (2) Standard Price or Rate $16.50 per pound $15.20 per hour 9.20 per hour Standard Cost (1) (2) $34.65 $15.20 $9.20 $59.05 Direct materials Direct labor Variable manufacturing overhead Total Variances Reported Standard Price Quantity or Cost or Rate Efficiency $554.400 $ 10.324 F $ 33.000 U $243,200 $ 3,400 U $ 15,200 U $147,200 $ 4,700 F $ U "Applied to Work in Process during the period. The company's manufacturing overhead cost is applied to production on the basis of direct labor-hours. All of the materials purchased during the period were used in production. Work in process inventories are insignificant and can be ignored. Required: 1. How many units were produced last period? 2. How many pounds of direct material were purchased and used in production? 3. What was the actual cost per pound of material? (Round your answer to 2 decimal places.) 4. How many actual direct labor-hours were worked during the period? 5. What was the actual rate paid per direct labor-hour? (Round your answer to 2 decimal places.) 6. How much actual variable manufacturing overhead cost was incurred during the period? 1. 2. 3. 4. 5. 6. Number of units produced Pounds of direct material purchased and used in production Actual cost per pound Actual direct labor-hours Actual rate per direct labor-hour Actual variable manufacturing overhead cost

Answer 1

1. number of units produced = Total standard cost / standard cost per unit

=[554400+243200+147200]/59.05

=16000 units

2.Material quantity variance= (Actual quantity - standard quantity) * standard price

(Actual quantity-2.10pound*16000units) *16.50 = 33000

actual quantity -33600 =33000/16.50

actual quantity = 35600 pound

3 . material price variance = (Actual price-standard price)*Actual quantity

-10324 = (Actual price-16.50)*35600    [As the variance is favorable it would be shown as negative meaning standard price is more than actual price]

-10324/35600= actual price- 16.50

-0.29 + 16.50= actual price

=16.21$

4.labor efficiency variance = (actual hours-standard hours)*standard rate per hour

(actual hours-1hour per unit*16000units)*15.20

15200/15.20 = actual hours-16000hours

actual hours= 17000hours

5.labor rate variance = (actual rate-standard r ate)*actual hours

3400 = (actual rate -1)17000

actual rate = 3400/17000   + 1

1.20$ per hour

6.variable overhead rate variance = Actual variable overhead - standard for actual output

-4700= actual variable overhead - 9.20*17000actual hours

-4700 = actual variable overhead -156400

actual variable overhead = 151700$