Question

Fortes Inc. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours. Inputs Direct materials Direct labor Variable manufacturing overhead Standard Quantity or Hours per Unit of Output 7.1 ounces 0.6 hours 0.6 hours Standard Price or Rate $ 7.30 per ounce $26.70 per hour $ 5.60 per hour The company has reported the following actual results for the product for April: Actual output Raw materials purchased Actual cost of raw materials purchased Raw materials used in production Actual direct labor-hours Actual direct labor cost Actual variable overhead cost 8,550 units 61,710 ounces $341,700 60,735 ounces 3,850 hours $107,860 $ 20,701

2.

Answer 1

1) Material price variance = (7.3*61710-341700) = 108783 F

Material quantity variance = (8550*7.1-60735)*7.3 = 219 U

Labor rate variance = (26.70*3850-107860) = 5065 U

Labor efficiency variance = (8550*.6-3850)*26.70 = 34176 F

Variable overhead rate variance = (5.6*3850-20701) = 859 F

variable overhead efficiency variance = (5130-3850)*5.6 = 7168 F

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