Silmon Corporation makes a product with the following standard costs: Inputs Sta

Question

Silmon Corporation makes a product with the following standard costs:

Inputs Standard Quantity
or Hours Standard Price
or Rate
Direct materials 4.9 grams $ 7.00 per gram
Direct labor 0.6 hours $ 14.00 per hour
Variable overhead 0.6 hours $ 4.00 per hour

In June the company produced 4,200 units using 21,830 grams of the direct material and 2,580 direct labor-hours. During the month the company purchased 24,100 grams of the direct material at a price of $6.80 per gram. The actual direct labor rate was $14.60 per hour and the actual variable overhead rate was $3.90 per hour. The materials price variance is computed when materials are purchased. Variable overhead is applied on the basis of direct labor-hours.


Compute the following variances for raw materials, direct labor, and variable overhead, assuming that the price variance for materials is recognized at point of purchase


a. Direct materials quantity variance
b. Direct materials price variance
c. Direct labor efficiency variance
e. Direct labor rate variance
d. Variable overhead efficiency variance
f. Variable overhead rate variance

Explanation / Answer

e. Direct labor rate variance

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