Question

Material, Labor, and Variable Overhead Variances The following summarized manufacturing data relate to Thomas Corporation's April 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 $38 $83,160 $17 Direct material Standard (2 lb. @ $19.00/lb.) Actual (4,200 lb. @ $19.80/lb.) Direct labor Standard (0.5 hr. @ $34/hr.) Actual (950 hrs. @ $33.00/hr.) Variable overhead Standard (0.5 hr. @ $16/hr.) Actual Total 31,350 $8 16,450 $130,960 $63 Determine the following 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 $

Answer 1

AQ = Actual Quantity		AP = Actual Price
SQ = Standard Quantity		SP = Standard Price
Actual cost	AQ * AP
Split Cost	AQ * SP
Standard Cost	SQ * SP
ANSWER
Materials Variance
Actual Cost	$83,160.00		Given
Split Cost	$79,800.00		(4200*19)
Standard Cost	$76,000.00		(2000*2*19)
Materials Price Variance	$3,360.00	Unfavourable	(SP-AP)AQ
			(19-19.80)4200
Materials efficiency	$3,800.00	Unfavourable	(SQ-AQ)SP
			(4000-4200)19
AH = Actual Hours		AR = Actual Rate
SH = Standard Hours		SR = Standard Rate
Actual cost	AH * AR
Split Cost	AH * SR
Standard Cost	SH * SR
ANSWER
Actual Cost	$31,350.00		Given
Split Cost	$32,300.00		(950*34)
Standard Cost	$34,000.00		(2000*0.5*34)
Labor Rate Variance	$950.00	Favourable	(SR-AR)AH
			(34-33)950
Labor efficiency Variance	$1,700.00	Favourable	(SH-AH)SR
			(1000-950)34
ANSWER
Actual Cost	$16,450.00		Given
Split Cost	$15,200.00		(950*16)
Standard Cost	$16,000.00		(2000*0.5*16)
Variable OH Spending Var	$1,250.00	Unfavourable	(SOR-AOR)AH
			(950*8 - 16450)
Variable OH Efficiency Var	$800.00	Favourable	(SH-AH)SR
			(1000-950)16

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