Question

Header Question 1 Triple Star Company's standard and actual costs per unit are provided below for the most recent period. During this period, 500 units were actually produced Product Product Standard Cont Actual Cost Materials Metres Unit Price Per Metre Standard 4 $2.00 $8.00 Actual $1.90 $7.79 Direct labour Hours Hourly Rate Standard $7.00 $21.00 Actual 3.2 $6.50 $20.80 Variable overhead Hours Hourly Rate Standard 2 $3.00 $6.00 Actual 2.2 $3.10 $6.82 Total unit cost $35.00 $35.41 Required: Given the information above, compute the following variances. Also indicate if the variances are favorable or unfavorable 1. Materials price variance 2. Materials quantity variance 3. Direct laborate variance 4. Direct labour efficiency variance 5. Variable overhead rate variance 6. Variable overhead efficiency variance 7. Please give some managerial suggestions based on your calculation.

Answer 1

1. Materials price variance = AQ x (AP – SP) = 2050 x ($1.90 - $2.00) = $205 Favorable

AQ = 500 x 4.1 = 2050

2. Materials quantity variance = SP x (AQ – SQ) = $2.00 x (2050 – 2000) = $100 Unfavorable

SQ = 500 x 4 = 2000

3. Direct labour rate variance = AH x (AR – SR) = 1600 x ($6.50 - $7.00) = $800 Favorable

AH = 500 x 3.2 = 1600

4. Direct labour efficiency variance = SR x (AH – SH) = $7.00 x (1600 – 1500) = $700 Unfavorable

SH = 500 x 3 = 1500

Per HOMEWORKLIB RULES the first 4 parts have been answered. Please post the remaining parts separately. Thank you.