Question

Filmore Company produces a lightweigh tablet that is popular with college students. Filmore was planning to product 900 tablets in March, but they ended up producing 920 tablets Answer the next three questions using the following information: Filmore uses a standard costing. Its standards of production, March Master (static planning) budget, and actual results are listed below: March Master Actual costs Budget 24,300 20,250 2,700 7,425 incurred $23,050 $21,500 Standards $5.40 per yard ? per DLH $2.00 per DLH $5.50 per DLH Direct Materials Direct Labor Variable MOH Fixed MOH $7,800 Manufacturing overhead (MOH) is applied to production on the basis of direct labor-hours (DLHs). Selected information relating to the month's peoduction is given below: Actual direct labor-hours 1,400 DLHs The difference between standard and actual variable cost per tablet produced during March was $0.20 favorable. 16 Variable MOH rate variance is $40 Favorable $806 Unfavorable $806 Favorable $766 Unfavorable A. B. C. D. E. None of the above 17 Direct labor wage efficiency variance is: А. $300 Unfavorable $550 Favorable $800 Favorable $500 Unfavorable В. с. D. E. None of the above Page 10 of 12

Answer 1

16) Standard DLH = Std variable MOH/Std Variable MOH cost per DLH

= $2,700/$2 per DLH = 1,350 DLHs

Std Direct labor rate per hour = Std Labor cost/Std Labor Hours

= $20,250/1,350 hours = $15 per hour
Total standard Variable cost = Direct material +Direct Labor+Variable MOH

= $24,300+$20,250+$2,700 = $47,250

Std variable cost per unit = $47,250/900 tablets = $52.50 per tablet

Actual variable cost per unit = $52.50 - $0.20 Favorable = $52.30 per unit

Total Actual Variable cost = $52.30*920 tablets = $48,116

Actual variable MOH = $48,116 - $23,050 - $21,500 = $3,566

Variable MOH Rate Variance = (Std Rate*Actual DLH) - Actual Variable MOH

= ($2*1,400) - $3,566 = $766 Unfavorable

Therefore variable MOH rate variance is $766 Unfavorable. Hence the correct option is D).

17) Std direct labor hours for 900 tablets = 1,350 hours

Std direct labor hours for actual production (i.e. 920) = 1,350 hrs*920/900 = 1,380 hours

Direct Labor Wage Efficiency Variance = (Std Labor Hours - Actual Labor hours)*Std Labor rate

= (1,380 - 1,400)*$15 = $300 Unfavorable

Therefore direct wage labor efficiency variance is $300 Unfavorable. Hence the correct option is A).