Question

itex, Inc. manufactures a popular consumer product and it has provided the following data excerpts from its standard cost system:

Inputs	(1) Standard Quantity or Hours		(2) Standard Price or Rate			Standard Cost (1) × (2)
Direct materials	2.30	pounds	$	16.30	per pound	$	37.49
Direct labor	1.00	hours	$	16.00	per hour	$	16.00
Variable manufacturing overhead	1.00	hours	$	9.60	per hour	$	9.60
Total standard cost per unit						$	63.09

	Total		Variances Reported
	Standard Cost*		Price or Rate			Quantity or Efficiency
Direct materials	$	712,310	$	13,253	F	$	32,600	U
Direct labor	$	304,000	$	4,000	U	$	16,000	U
Variable manufacturing overhead	$	182,400	$	4,400	F	$	?†	U

*Applied to Work in Process during the period.

The company's manufacturing overhead cost is applied to production on the basis of direct labor-hours. All of the materials purchased during the period were used in production. Work in process inventories are insignificant and can be ignored.

Required:

1. How many units were produced last period?

2. How many pounds of direct material were purchased and used in production?

3. What was the actual cost per pound of material? (Round your answer to 2 decimal places.)

4. How many actual direct labor-hours were worked during the period?

5. What was the actual rate paid per direct labor-hour? (Round your answer to 2 decimal places.)

6. How much actual variable manufacturing overhead cost was incurred during the period?

1. 2. Number of units produced Pounds of direct material purchased and used in production Actual cost per pound 3. 4. Actual direct labor-hours 5. Actual rate per direct labor-hour Actual variable manufacturing overhead cost 6.

Answer 1

1) Number of units produced = 712310/37.49 = 19000 Units

2) Material quantity variance = (SQ-AQ)SP

-32600 = (19000*2.3*16.30-16.30X)

16.30X = 712310+32600

X(Actual pounds purchase and used) = 744910/16.30 = 45700 Pounds

3) Material price variance = (SP-AP)AQ

13253 = (16.30*45700-45700X)

45700X = 731657

X(actual price) = 16.01

4) Labor efficiency variance = (SH-AH)SR

-16000 = (19000*1*16-16X)

16X = 304000+16000

X(actual hour) = 20000 Hour

5) Labor rate variance = (SR-AR)AH

-4000 = (16*20000-20000X)

20000X = 324000

X(AR) = 16.20

5) Variable overhead efficiency variance = (19000-20000)*9.6 = 9600 U

Actual variable manufacturing overhead cost = 182400-4400+9600 = 187600