Question

Material, Labor, and Variable Overhead Variances The following summarized manufacturing data relate to Kiosse Corporation's May 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 $13,640 Direct material Standard (3 lb. @ $2.00/lb.) Actual (6,200 lb. @ $2.20/lb.) Direct labor Standard (0.5 hr. @ $14/hr.) Actual (980 hrs. @ $13.70/hr.) Variable overhead Standard (0.5 hr. @ $4/hr.) Actual Total 13,426 $15 4,200 $31,266 Assume that the 6,200 lb. of materials purchased were all used in producing the 2,000 completed units. Determine the materials price and efficiency variances, labor rate and efficiency variances, and variable overhead spending and efficiency 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: Split cost: Standard cost: Materials price Materials efficiency $ Labor Variances Actual cost: Split cost: Standard cost: Labor rate $

Answer 1

Answer

Material Variance
Actual Cost	$13,640	6200 lb x $ 2.20
Split Cost	$12,400	6200 lb x $ 2.00
Standard Cost	$12,000	2000 units x $ 6
Material Price Variance	$1,240	Unfavourable
Material Efficiency Variance	$400	Unfavourable, as Actual quatity is MORE than Standard quantity

Labor Variance
Actual Cost	$13,426	980 hrs x $ 13.70
Split Cost	$13,720	980 hrs x $ 14
Standard Cost	$14,000	2000 units x 0.5hrs x $ 14
Labor rate Variance	$294	Favourable, as Actual rate is LESS than Standard rate
Labor Efficiency Variance	$280	Favourable, as Actual quatitity is LESS than Standard quantity

Variable Overhead Variance
Actual Cost	$4,200
Split Cost	$3,920	980 hrs x $ 4
Standard Cost	$4,000	2000 x 0.5hrs x $ 4
Variable Overhead rate Variance	$280	Unfavourable
Variable Overhead Efficiency Variance	$80	Favourable