Question

Problem 16-64 (Algo) Manufacturing Variances (LO 16-5) Delta Products prepares its budgets on the basis of standard costs. A responsibility report is prepared monthly showing the differences between master budget and actual results. Variances are analyzed and reported separately. There are no materials inventories. The following information relates to the current period: $ 24 100 Standard costs (per unit of output) Direct materials, 6 gallons @ $4.00 per gallon Direct labor, 5.00 hours @ $20.00 per hour Factory overhead Variable (25% of direct labor cost) Total standard cost per unit 25 $149 Actual costs and activities for the month follow: Materials used Output Actual labor costs Actual variable overhead 15,570 gallons at $1.89 per gallon 2,150 units 6,100 hours at $40.90 per hour $61,500 Required: Prepare a cost variance analysis for the variable costs. (Enter your final answers as a whole number. Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)

Answer 1

SQ = Actual units ( X ) Standard quantity per unit. Standard Qunatity = 2150 X 6 = 12900 I Particulars | Direct Material sQ 12900 SP 4.00 AQ AP 155701 $ 1.89 | 1 $ L ==>> SQ X SP - $ 51,600 SQ = Standard Quantity for Actual output SP = Standard Price per Raw material AQ = Actual Quantiity consumed AP = Actual Price per Raw material

SP Actual Cost AQ X AP 15570 X $1.89 $29,427 AQ 15570 SQ 12900 $4.00 X $62,280.00 Standard Cost X X $ $51,600.00 SP 4.00 $ 32,853 $(10,680) Direct Material Price Variance Direct Material Efficiency varaiance Total Direct Material Cost Variance $ 32,853 $ (10,680) $ 22,173 Favorable Unfavorable Favorable Direct Material Price Variance = (AQ * SP) - (AQ * AP) Direct Material Qunatity Variance = ( SQ * SP) - (AQ * SP) Total Direct Material Cost Variance = ( SQ * SP) - (AQ * AP)

SH = Actual units (X) Standard hours per unit. | Standard Hors = 2150 X 5 = 10750 Particulars | Direct Labor SH ISR 10750 $ 20.00 A HAR 6100 $ 40.90 ===>> SH X SR = $215,000 SH = Standard Hours per Actual Output SR = Standard Rate per Hour AHP = Actual Hours Paid AR = Actual Rate per Hour.

X Actual Cost AH X AR 6100 X $ 40.90 $249,490 AH 6100 SR $20.00 SH 10750 Standard Cost X SR X $20.00 $215,000.00 $20. $ 122,000.00 $ (127,490) $93,000.00 Direct Labor Price Variance Direct Labor Efficiancy Variance Total Labor Cost Variance $(127,490) Unfavorable $ 93,000 Favorable $ (34,490) Unfavorable Direct Labor Rate Variance Direct Labor Efficiancy Variance Total Labor Cost Variance = ( AH * SR) - (AH * AR) = ( SH * SR) - (AH * SR) = ( SH * SR) - (AH * AR)