Question

Delta Products prepares its budgets on the basis of standard costs. A responsibility report is prepared monthly showing the differences between master budget and actual results. Variances are analyzed and reported separately. There are no materials inventories. The following information relates to the current period:

Delta Products prepares its budgets on the basis of standard costs. A responsibility report is prepared monthly showing the differences between master budget and actual results. Variances are analyzed and reported separately. There are no materials inventories. The following information relates to the current period: $ 24 145 Standard costs (per unit of output) Direct materials, 6 gallons @ $4.00 per gallon Direct labor, 5.00 hours @ $29.00 per hour Factory overhead Variable (20% of direct labor cost) Total standard cost per unit 29 $198 $ 198 Actual costs and activities for the month follow: Materials used Output Actual labor costs Actual variable overhead 15,270 gallons at $1.83 per gallon 2,210 units 6,000 hours at $40.30 per hour $57,300 Required: Prepare a cost variance analysis for the variable costs. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.) Direct materials: Price variance Efficiency variance Direct materials cost variance Direct labor Price variance Efficiency variance Direct labor cost variance Variable overhead: Price variance Efficiency variance Variable overhead cost variance

Answer 1

we Have actual output = 2210 units , we will Find the standard cost of Direct material , Labour cost and factory overheard as per the actual output units

we Have actual output = 2210 units, we will find the standard cost of Direct material, Labour cost and factory overheard as per the actual output units direct material 2210 * 6 gallons 13260 Direct labour 2210 * 5 hrs 11050 factory over head 20% of standard direct labour cost Standard cost for actual output for 2210 units actual cost fro 2210 units AQ AR DIRECT material Direct labour factory overhead SQ 13260 * 11050 * 11050 * 4 = 29 = 5.8 = Scost 53040 320450 64090 DIRECT material Direct labour factory overhead 15270 * 6000 * 6000 * 1.83 = 40.3 = 9.55 = Acost 27944.1 241800 57300 Direct material variance Price variance efficency Variance Direct material Price variance SR (SQ-AQ) (13260-15270) 4 -2010 * -8040 8040 U Direct material Efficency variance АО (SR-AR) (4-1.83) 15270 15270 2.17 * 33135.9

33135.9 F Direct material variance Actual Direct Material cost 27944.1 Standard direct material cos - 53040 25095.9 25095.9 F Direct Labour Price variance SR (SH-AH) (11050-6000) 29 29 5050 * 146450 146450 F Direct Labour Efficency variance AH (SR-AR) (29-40.3) 6000 6000 -11.3 * -67800 67800 U Direct Labour Variance Standard direct Labour cost- 320450 78650 Actual Direct Labour cost 241800 78650 F

Variable Overhead Price variance = * SR (SH-AH) (11050-6000) 5.8 5.8 5050 * 29290 29290 F Variable Overhead Efficency variance = * AH (SR-AR) (5.8-9.55) 6000 6000 -3.75* -22500 22500 U Variable overhead Variance Standard Variable overhead - 64090 Actual Overhead Variable cost 57300 6790 6790 F

Direct material :
Price variance	8040	U
Efficency variance	33135.9	F
Direct Material cost Variance	25095.9	F
Direct Labour :
Price variance	146450	F
Efficency variance	67800	U
Direct Labour cost Variance	78650	F
VAriable overhead :
Price VAriance	29290	F
Efficency variance	22500	U
Variable overhead cost Variance	6790	F