Question

Vitex, Inc. manufactures a popular consumer product and it has provided the following data excerpts from its standard cost system:

Inputs	(1) Standard Quantity or Hours		(2) Standard Price or Rate			Standard Cost (1) × (2)
Direct materials	2.40	pounds	$	17.10	per pound	$	41.04
Direct labor	1.00	hours	$	15.30	per hour	$	15.30
Variable manufacturing overhead	1.00	hours	$	9.30	per hour	$	9.30
Total standard cost per unit						$	65.64

	Total		Variances Reported
	Standard Cost*		Price or Rate			Quantity or Efficiency
Direct materials	$	779,760	$	13,804	F	$	34,200	U
Direct labor	$	290,700	$	4,000	U	$	15,300	U
Variable manufacturing overhead	$	176,700	$	4,500	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. Number of units produced 2. Pounds of direct material purchased and used in production 3. Actual cost per pound 4. Actual direct labor-hours 5. Actual rate per direct labor-hour 6. Actual variable manufacturing overhead cost

Answer 1

Vitex, Inc. Requirement 1 The number of units produced can be computed by using the total standard cost applied for the period for any input-direct materials, direct labor, or variable manufacturing overhead. Using the standard cost applied for direct materials, we have: 779760 / 41.04 = 19000 Units Total standard cost applied for the period Standard cost per unit Requirement 2& 3 Actual Quantity of Inputs, at Standard Price = 779760 +34200 U = 813960 Actual Quantity of Inputs x $17.10 per pound = $813960 Actual Quantity of Inputs = 47600 pounds pounds of direct material were purchased and used in production = 47600 pounds Actual Quantity of Inputs, at Actual Price = 779760 + 34200 U - 13804 F = $800156 47600 pounds x at Actual Price = $800156 Actual Price = $ 16.81 per pound Requirement 4 & 5 Actual Hours of Input, at the Standard Rate = $306000 Actual Hours of Input, $15.30 = $306000 Actual Hours of Input = 20000 hours Actual Hours of Input, at the Actual Rate = 290700 + 4000 U + 15300 U = $310000 20000 hours x Actual Rate = $310000 Actual Rate = $15.50 Requirement 6 Standard variable overhead cost applied Add: Overhead efficiency variance Deduct: Overhead rate variance Actual variable overhead cost incurred 176700 9300 U 4500 F 181500 19,000 units x 1.00 DLHs per unit = 19,000 DLHS Standard Hours Allowed for Output, at the Standard Rate = 19,000 DLHs x $9.30 per DLH = $176,700 Actual Hours of Input, at the Standard Rate = 20,000 DLHs * $9.30 per DLH = $186,000 Variable overhead efficiency variance = 186000 - 176700 = 9300 U