Question

Cost per Cost per 8 9.12 29.00 Direct materials: standard: 1.90 feet at $4.80 per Foot Actual 1.85 foot at 15.20 per foot Direct labor: standard: 1.45 hours at $20.00 per hour Actual 1.50 hours at $19.50 per hour Variable overhead: standard, 1.45 hourRat 10.00 per hour Actual 1.50 hours at $9.60 por hour Total cost per unit ENCORR of actual cost over standard cont per unit 29.25 14.50 14.40 $52.62 $53.27 The production superintendent was pleased when he saw this report and commented: "This $0,65 excess cost is we percent limit management has set for acceptable variances, it's obvious that there's not much to worry about with thi Actual production for the month was 19,500 units. Variable overhead cost is assigned to products on the basis of dire There were no beginning or ending Inventories of materials. Required: 1. Compute the following variances for Mav: a. Materials price and quantity variances. b. Labor rate and efficiency variances. c. Variable overhead rate and efficiency variances. 2. How much of the $0.65 excess unit cost is traceable to each of the variances computed in (1) above. 3. How much of the $0.65 excess unit cost is traceable to apparent inefficient use of labor time? Required 1 Required 2 Required 3 la. Compute the following variances for May, materials price and quantity variances 1b. Compute the following variances for May, labor rate and efficiency variances. 1c. Compute the following variances for May, variable overhead rate and efficiency variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no errec as positive values.) 1a. Materials price variance Materials quantity variance b. Labor rate variance Variable overhead rate variance Variable overhead officiency variances Required 1 Required 2 Required 3 How much of the 50.65 excess unit cost is traceable to each of the variances computed in (1) above. (Indicate the effect of cach variance by selecting "F" for favorable, "ufor unfavorable, and "None" for no effect (Le., zero variance). Input all amounts as positive values, Round your answers to 2 decimal places.) Materials: Price variance Quantity variance Labor. Rate varianon Efficiency variance Variable overhead: Rate variance Efficiency variance Excess of actual over standard cost per unit $ 0.00

Answer 1

Material price Variance=	(SP-AP)*AQ	(4.80-5.2)*36075	(14,430)	Unfavourable
Material Quantity Variance=	(SQ-AQ)*Sp	(37050-36075)*4.80	4,680	Favourable
Labour Rate Variance	(SR-AR)*AH	(20-19.5)*29250	14,625	Favourable
Labour Quantity Variance	(SH-AH)*SR	(28275-29250)*20	(19,500)	Unfavourable
Variable Overhead Rate Variance	(SR-AR)*AH	(10-9.6)*29250	11,700	Favourable
Variable Overhead Quantity Variance	(SH-AH)*SR	(28275-29250)*10	(9,750)	Unfavourable

	Standard Cost			Standard Cost for 19,500 Units			Actual for 19,500 Units
	Units	Rate	Total	Units	Rate	Total	Units	Rate	Total
Material	1.9	4.80	9.12	37,050.00	4.80	177,840.00	36,075.00	5.20	187,590.00
Labour	1.45	20.00	29.00	28,275.00	20.00	565,500.00	29,250.00	19.50	570,375.00
Ovehead	1.45	10	14.50	28,275.00	10.00	282,750.00	29,250.00	9.60	280,800.00

Material
Price Variance	(0.74)	Unfavourable
Quantity Variance	0.24	Favourable	(0.50)	(0.50)
Labour
Rate Variance	0.75	Favourable
Quantity Variance	(1.00)	Unfavourable	(0.25)	(0.25)
Variable Overhead
Rate Variance	0.60	Favourable
Quantity Variance	(0.50)	Unfavourable	0.10	0.10
Excess of Standard Over Actual per Unit				(0.65)

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