Question

Versailles Company produces a product that is onderd control. The following are the standards for produc e nt of peod len VERSAILLES COMPANY STANDARDS FOR PRODUCTION OF ONE UNIT OF PRODUCT Standard Standard Standard Quantity of Price Input of Input Per Unit Direct Materials 3 units 5 12.00S 36.00 Direct Labor 1.0 hours 10.00 10.00 Variable Manufacturing Overhead 1.0 hours 6.00 6.00 Fixed Manufacturing Overhead 1.0 hours 18.00 18.00 During the period, the company recorded the attached activity in connection with the production of its product. (b) VERSAILLES COMPANY ACTUAL ACTIVITY FOR PRODUCTION DURING PERIOD (a) The company purchased 20,000 units of direct materials at a total cost of S246,000. The company used 19,500 units of direct materials in producing the product. A total of 5,200 hours of direct labor were recorded at an average actual rate of $11.00 per hour. (c) The company actually produced 5,000 units of output during the year. (d) The actual variable manufacturing overhead incurred was $28,500 and the actual fixed manufacturing overhead incurred was $91,700. (e) The company calculated its manufacturing overhead rates using a normal capacity of 5,500 direct labor hours.

Answer 1

1. Direct Material Price Variance = Act qty*(Standard Price-Actual Price)

= 19500*(12-12.03) = 5850 unfav

2. Direct Material quantity variance = Std Price*(Stand Qty- Actual Qty)

= 12*(15000-19500) = 54000 unfav

3. Direct Labour Price Variance = Act Hours*(Standard Price - Actual Price)

= 5200*(10-11) = 5200 unfav

4. Direct Labour Quantity Variance = Std Price (Std Hours- Actual Hours)

= 10*(5000-5200) = 2000 unfav

5. VOH Price Variance = Act Hours*Std Rate - Actual VOH

5200*6- 28500 = 2700 Fav

6. VOH Qty Variance = Std Price*(Std Hours - actual hours)

= 6*(5000-5200) = 1200 unfav

7. FOH Price Variance = (Budgeted Hour *Std rate)-Actual FOH

= (5500*18)- 91700= 7300 Fav

8. FOH Volume Variance = Absorbed FOH - (Budgeted Hour *Std rate)

= (5200*18)-(5500*18)= 5400 Unfav