Question

Kropf Inc. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours.

Inputs	Standard Quantity or Hours per Unit of Output			Standard Price or Rate
Direct materials		8.90	liters	$	8.50	per liter
Direct labor		0.50	hours	$	29.70	per hour
Variable manufacturing overhead		0.50	hours	$	7.40	per hour

The company has reported the following actual results for the product for September:

Actual output		11,100	units
Raw materials purchased		100,500	liters
Actual cost of raw materials purchased	$	875,500
Raw materials used in production		98,820	liters
Actual direct labor-hours		5,140	hours
Actual direct labor cost	$	160,302
Actual variable overhead cost	$	33,414

Required:

a. Compute the materials price variance for September.

b. Compute the materials quantity variance for September.

c. Compute the labor rate variance for September.

d. Compute the labor efficiency variance for September.

e. Compute the variable overhead rate variance for September.

f. Compute the variable overhead efficiency variance for September.

Answer 1

a) Material price variance = (8.5*100500-875500) = 21250 U

b) Material quantity variance = (11100*8.9-98820)*8.5 = 255 U

c) Labor rate variance = (29.70*5140-160302) = 7644 U

d) Labor efficiency variance = (5550-5140)*29.70 = 12177 F

e) Variable overhead rate variance = (7.4*5140-33414) = 4622 F

f) Variable overhead efficiency variance = (5550-5140)*7.4 = 3034 F