EXERCISE #3-Rate Variance / Time Variance/ Total Cost Variance Japan Company pro

Question

EXERCISE #3-Rate Variance / Time Variance/ Total Cost Variance Japan Company produces lamps requiring 2.25 hours standard per unit at a rate per hour to S15.00 per hour. The production of 7,700 units required 19,250 hours at a rate per hour of $14.90 per hour. Instructions: Determine what is the direct labor: (a) Rate variance (b) Time variance (c) Total cost variance EXERCISE #4-Materials Price Variance / Materials Quantity Variance The requirement of standard material of marine Aquatic Corp. to produce a model 2018 is 15 pounds of material to $110.00 per pound. Last month, marine Aquatic bought 170,000 pounds of material at a total cost of $17, 850,000. 162,000 pounds she used to produce 10,000 units of the 2018 model. Instructions: Determine (a) materials price variance (b) materials quantity variance Indicate whether each variance is favorable or unfavorable.

Explanation / Answer

PART-1)

1) Rate variance: 1,925F

Working:

19,250(14.90-15) = 1,925F

2) Time variance: $1732.50f

Working: 17,325($15-$14.90) = $1,732.50Favorable

3) Total cost variance: $26,950 F

Working: $15*17325 - $14.9*19,250 = $26,950 Favorable

PART-2)

Material price variance: $850,000F

Working:

Actual cost = 17,850,000 / 170,000 = $105

Material price variance: ($105-$110) * 170,000 = 850,000 Favorable

2) Material quantity variance: $1,320,000F

Working:

Material quantity variance: [($162,000 - (15*10,000)] * 110,000 = 1,320,000 Favorable

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