Question

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Case 10-17 Working Backwards from Variance Data (L010-1, LO10-2, LO10-3) Vitex, Inc. manufactures a popular consumer product and it has provided the following data excerpts from its standard cost system: Inputs Direct materials Direct labor Variable manufacturing overhead Total standard cost per unit (1) Standard Quantity or Hours 2.00 pounds 1.00 hours 1.00 hours (2) Standard Price OF Rate $16.80 per pound $15.80 per hour $9.40 per hour Standard Coat (1) * (2) $33.60 $15.80 $ 9.40 $ 58.80 Direct materials Direct labor Variable manufacturing overhead Total Variances Reported Standard Price Quantity or Cost. Or Rate Efficiency $537,600 $9,860 F $ 33,600 U $252,800 $ 3,400 U $ 15, 8 0 0 0 $150,400 $ 4,800 $ ? 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 bald der direct labor-hour? (Round vour answer to 2 decimal places.) < Prev 3 of 4 !!! Next >

Answer 1

1)

Units produced = Standard cost/Standard cost per unit

Units produced = $537,600/33.60

Units produced = 16,000 units

2)

Material quantity variance = (Standard quantity-Actual quantity)*Standard price

-33,600 = [(16,000*2)-Actual quantity)*$16.80

32,000-Actual quantity = -$33,600/16.80

32,000-Actual quantity = -2,000

Actual quantity = 32,000 + 2,000

Actual quanity = 34,000 pounds

3)

Material price variance = (Standrd price-Actual price)*Actual quantity

$9,860 = ($16.,80-Actual price)*34,000

$16.80-Actual price = $9,860/34,000

$16.80-Actual price = $0.29

Actual price = $16.80 -$0.29

Actual price = $16.51

4)

Direct labor efficiency variance = (Standard hours-Actual hours)*Standard rate

-$15,800 = [(16,000*1)-Actual hours)*$15.80

[(16,000*1)-Actual hours) = -$15,800/$15.80

16,000 - Actual hours = -1,000

Actual hours = 16,000 + 1,000

Actual hours = 17,000 hours

5)

Labor rate variance = (Standard rate-Actual rate)*Actual hours

-$3,400 = ($15.80-Actual rate)*17,000

$15.80-Actual rate = -$0.2

Actual rate = $15.8 + $0.2

Actual rate = $16

6)

Variable overhead efficiency variance = (Standard hours-Actual hours)*Standard rate

Variable overhead efficiency variance = (16,000 -17,000)*$9.4

Variable overhead efficiency variance = $9,400 Unfavorable

Total variable overhead variance =Variable overhead rate variance + Variable overhead efficiency variance

Total variable overhead variance = $4,800 -$9,400

Total variable overhead variance = $4,600 unfavorable

Actual variable manufacturing overhead = Standard cost + $4,600

Actual variable manufacturing overhead = $150,400 + 4,600

Actual variable manufacturing overhead = $155,000