Question

I need help with finding what formulas to use and how to solve these two questions.

1. What is the direct labor rate variance?
2. What is the fixed overhead volume variance amount?

The given: Martin Co. gathered the following actual results for the current month: Actual Units produced 3,000 Direct materials purchased and used (5,400 lbs.) $21,600 Direct labor cost (4,600 hours actual) $36,800 Manufacturing overhead costs incurred: $37,650 [=Variable $16,250 and Fixed $21,400] Machine hours (610 hours actual) The Static original budgeted production was 3,500 units. The Input standards were: Std Quantity x Std Price per input =Std Cost per Output U Direct materials 2 lbs./Output unit x $4.25/lb. Direct labor 1.5 hrs./Output unit x $7.50/hr. Variable manufacturing overhead 0.2 Machine hr x $25 per hr = $5 per unit Fixed mfg. overhead [Budget $21,000] 0.2 machine hr x $30 per hr = $6 per unit.

Answer 1

Answer		Budgeted			Actual			Standard (budegted for actual)
		Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
	Units	3500			3000			3000
	Direct Material	2	4.25	8.5	5400	4	21600	6000	4.25	25500
	Direct Labour	1.5	7.5	11.25	4600	8	36800	4500	7.5	33750
	Manufacturing Overhead-Variable	0.2	25	5	610		16250	600	25	15000
	Manufacturing Overhead-Fixed	0.2	30	21000	610		21400	600	30	18000
	Direct Labour Variance	Actual-Standard
		36800-33750
		3050	Unfavourable
1	Direct Labour Rate Variance	(Actual Rate-Standard Rate)*actual hours
		(8-7.5)*4600
		2300	Unfavourable
	Direct Labour efficiency variance	(Actual hours-standard hours)*standard rate
		(4600-4500)*7.5
		750	Unfavourable
2	Fixed Overhead Volume Variance	(Budgeted hours-standard hours for actual output)*standard fixed overhead rate per hour
		(0.2*3500-0.2*3000)*30
		3000	Favourable