Answer
Actual DATA for |
3500 |
units |
|
Quantity (AQ) |
Rate (AR) |
Actual Cost |
|
Direct Material |
12500 |
$ 17.85 |
$ 223,125.00 |
Direct labor |
3150 |
$ 12.50 |
$ 39,375.00 |
Variable Overhead |
3150 |
$ 1.62 |
$ 5,100.00 |
Standard DATA for |
3500 |
units |
|
Quantity (SQ) |
Rate (SR) |
Standard Cost |
|
[A] |
[B] |
[A x B] |
|
Direct Material |
( 2.5 ounces x 3500 units)=8750 ounces |
$ 19.00 |
$ 166,250.00 |
Direct labor |
( 0.7 hours x 3500 units)=2450 hours |
$ 15.00 |
$ 36,750.00 |
Variable Overhead |
( 0.7 hours x 3500 units)=2450 hours |
$ 4.00 |
$ 9,800.00 |
Note: |
Material Price Variance can have two possible answers: |
>#1 based on actual qty purchased |
>#2 based on actual qty used. |
Both the answers have been provided. |
Part A
Material Price Variance |
||||||
( |
Standard Rate |
- |
Actual Rate |
) |
x |
Actual Quantity |
( |
$ 19.00 |
- |
$ 17.85 |
) |
x |
12500 |
14375 |
||||||
Variance |
$ 14,375.00 |
Favourable-F |
OR
Material Price Variance |
||||||
( |
Standard Rate |
- |
Actual Rate |
) |
x |
Actual Quantity |
( |
$ 19.00 |
- |
$ 17.85 |
) |
x |
9250 |
10637.5 |
||||||
Variance |
$ 10,637.50 |
Favourable-F |
||||
Material Quantity Variance |
||||||
( |
Standard Quantity |
- |
Actual Quantity |
) |
x |
Standard Rate |
( |
8750 |
- |
9250 |
) |
x |
$ 19.00 |
-9500 |
||||||
Variance |
$ 9,500.00 |
Unfavourable-U |
Part B
YES, it is recommended because the prices offered by the seller are LESS than the standard price of material.
Part A
Labor Rate Variance |
||||||
( |
Standard Rate |
- |
Actual Rate |
) |
x |
Actual Labor Hours |
( |
$ 15.00 |
- |
$ 12.50 |
) |
x |
3150 |
7875 |
||||||
Variance |
$ 7,875.00 |
Favourable-F |
||||
Labour Efficiency Variance |
||||||
( |
Standard Hours |
- |
Actual Hours |
) |
x |
Standard Rate |
( |
2450 |
- |
3150 |
) |
x |
$ 15.00 |
-10500 |
||||||
Variance |
$ 10,500.00 |
Unfavourable-U |
Part B
NO, it is not recommended, because this has led to lower efficiencies among workers, as evident by Unfavourable Efficiency Variance, calculated above.
Variable Overhead Rate Variance |
||||||
( |
Standard Rate |
- |
Actual Rate |
) |
x |
Actual Labor Hours |
( |
$ 4.00 |
- |
$ 1.62 |
) |
x |
3150 |
7500 |
||||||
Variance |
$ 7,500.00 |
Favourable-F |
||||
Variable Overhead Efficiency Variance |
||||||
( |
Standard Hours |
- |
Actual Hours |
) |
x |
Standard Rate |
( |
2450 |
- |
3150 |
) |
x |
$ 4.00 |
-2800 |
||||||
Variance |
$ 2,800.00 |
Unfavourable-U |
Becton Labs, Inc., produces various chemical compounds for industrial use. One compound, called Fludex, is prepared...
Becton Labs, Inc., produces various chemical compounds for industrial use. One compound, called Fludex, is prepared using an elaborate distilling process. The company has developed standard costs for one unit of Fludex, as follows: Direct materials Direct labor Variable manufacturing overhead Total standard cost per unit Standard Quantity or Hours 2.20 ounces 0.50 hours 0.50 hours Standard Price or Rate $25.00 per ounce $15.00 per hour $ 3.00 per hour Standard Cost $55.00 7.50 1.50 $64.00 During November, the following...
Becton Labs, Inc., produces various chemical compounds for industrial use. One compound, called Fludex, is prepared using an elaborate distilling process. The company has developed standard costs for one unit of Fludex, as follows: Standard Quantity Standard Price Standard or Hours or Rate Cost Direct materials Direct labor Variable manufacturing overhead Total standard cost per unit 2.40 ounces 0.70 hours 0.70 hours 18.00 per ounce $43.20 9.80 s 3.00 per hour 0 14.00 per hour 2.10 $55.10 During November, the...
Becton Labs, Inc., produces various chemical compounds for industrial use. One compound, called Fludex, is prepared using an elaborate distilling process. The company has developed standard costs for one unit of Fludex, as follows: Standard Quantity Standard Price Standard or Hours or Rate Cost Direct materials 2.00 ounces $30.00 per ounce $ 60.00 Direct labor 0.50 hours $14.00 per hour 7.00 Variable manufacturing overhead 0.50 hours $ 3.40 per hour 1.70 Total standard cost per unit $68.70 During November, the...
Becton Labs, Inc., produces various chemical compounds for industrial use. One compound, called Fludex, is prepared using an elaborate distilling process. The company has developed standard costs for one unit of Fludex, as follows: Direct materials Direct labor Variable manufacturing overhead Total standard cost per unit Standard Quantity or Hours 2.60 ounces 0.60 hours 0.60 hours Standard Price or Rate $29.00 per ounce $12.00 per hour $ 3.50 per hour Standard Cost $75.40 7.20 2.10 $84.70 During November, the following...
Becton Labs, Inc., produces various chemical compounds for industrial use. One compound, called Fludex, is prepared using an elaborate distilling process. The company has developed standard costs for one unit of Fludex, as follows: Standard Quantity or Hours 2.30 ounces 0.60 hours 0.60 hours Direct materials Direct labor Variable manufacturing overhead Total standard cost per unit Standard Price Or Rate $17.00 per ounce $13.00 per hour $ 2.50 per hour Standard Cost $39.10 7.80 1.50 $48.40 During November, the following...
Becton Labs, Inc., produces various chemical compounds for industrial use. One compound, called Fludex, is prepared using an elaborate distilling process. The company has developed standard costs for one unit of Fludex, as follows: Direct materials Direct labor Variable manufacturing overhead Total standard cost per unit Standard Quantity or Hours 2.60 ounces 0.60 hours 0.60 hours Standard Price or Rate $29.00 per ounce $12.00 per hour $ 3.50 per hour Standard Cost $75.40 7.20 2.10 $ 84.70 During November, the...
Becton Labs, Inc., produces various chemical compounds for industrial use. One compound, called Fludex, is prepared using an elaborate distilling process. The company has developed standard costs for one unit of Fludex, as follows: Direct materials Direct labor Variable manufacturing overhead Total standard cost per unit Standard Quantity or Hours 2.30 ounces 0.50 hours 0.50 hours Standard Price or Rate $26.00 per ounce $14.00 per hour $ 3.40 per hour Standard Cost $59.80 7.00 1.70 $68.50 During November, the following...
Becton Labs, Inc., produces various chemical compounds for industrial use. One compound, called Fludex, is prepared using an elaborate distilling process. The company has developed standard costs for one unit of Fludex, as follows: Standard Quantity or Hours 2.50 ounces Standard Price Standard or Rate $19.00 per ounce Cost $ 47.50 Direct materials $15.00 per hour 4.00 per hour Direct labor 0.70 hours 10.50 0.70 hours Variable manufacturing overhead 2.80 $ 60.80 Total standard cost per unit During November, the...
Becton Labs, Inc., produces various chemical compounds for industrial use. One compound, called Fludex, is prepared using an elaborate distilling process. The company has developed standard costs for one unit of Fludex, as follows: Direct materials Direct labor Variable manufacturing overhead Total standard cost per unit Standard Quantity or Hours 2.30 ounces 0.80 hours 0.80 hours Standard Price or Rate $24.00 per ounce $15.00 per hour $ 3.50 per hour Standard Cost $55.20 12.00 2.80 $70.00 During November, the following...
Becton Labs, Inc., produces various chemical compounds for industrial use. One compound, called Fludex, is prepared using an elaborate distilling process. The company has developed standard costs for one unit of Fludex, as follows: Direct materials Direct labor Variable manufacturing overhead Total standard cost per unit Standard Quantity or Hours 2.40 ounces 0.70 hours 0.70 hours Standard Price or Rate $18.00 per ounce $14.00 per hour $ 3.00 per hour Standar Cost $43.20 9.80 - 2.10 $55.10 During November, the...