Problem 1 (Textbook Reference: P8-1)- Compute materials variances A product has
ID: 2405082 • Letter: P
Question
Problem 1 (Textbook Reference: P8-1)- Compute materials variances A product has a standard materials usage and of materials were purchased at $7.30 materials. cost of 4 pounds per unit at $7.00 per pound. During the month, 2,400 pounds per pound. Production for the month totaled 550 units requiring 2,100 pounds of Required: (circle F or U to indicate whether the variance is favorable or unfavorable) 1. Compute the materials price variance: 2. Compute the materials quantity usage variance: 3. Compute the total materials variance: 120 o F or U F or U F or U ***You must show your work to receive credit*** SR Fer achual procuchen 55P ×? 2200Explanation / Answer
Problem 1:
Standard
Price per
Pound
(A)
Standard
Material
Quantity
For Actual
Output(B)
Standard
Cost for
Actual
Output
C=(A)*(B)
Actual
Price
Per
Pound
(D)
Actual
Material
Quantity
Used
(E)
Actual
Cost
F=D*E
Product
$ 7/pound
2200 pounds
(4pounds*550 units)
$ 15,400
$7.30/pound
2100 pounds
$ 15,330
=($ 7-$ 7.30)* 2100 pounds=$ 630 U
2) Material Quantity Usage Variance=( Standard usage of materials for Actual Production-Actual Quantity of Materials used)* Standard price of the material
=( 2200 pounds-2100 pounds)*$ 7/pound= $ 700 F
3) Total Material Variance= Standard Cost-Actual Cost
= Standard Material Cost of the Actual Production Volume- Actual Material Cost
=$ 15,400- $ 15,330
=$ 70 F
Problem 2:
Standard
Rate /hour
Standard
Hours for actual
Output
Standard
Labour
Cost
Actual
Labour
Rate/hour
Actual
Hours
Actual
Labour
Cost
Product
$ 6/hour
2,00,000 hours
(1hour*2,00,000
Boxes)
$ 12,00,000
$ 5.5/hour
2,08,000
hours
$ 11,44,000
=$6*208000-$ 11,44,000
=$ 104000 F
2.) Labour Efficiency Variance=Standard Cost of the standard time taken to produce the actual output-Standard cost of the Actual time taken)
=$ 12,00,000-$6*208000
=$ 48,000U
3.)Total labour variance=Standard labour cost-Actual labour cost
=$ 12,00,000-$11,44,000
=$ 56,000 F
Problem 3:
=(Standard price-Actual price)*Actual quantity
=( $8-$8.40) *24,000 pounds
=$ 9,600 U
2.) Material usage variance=Standard material cost of the standard quantity of materials used for the actual production-Standard cost of the actual quantity of material used
=$8( 0.25 pounds* 98,400 units-24,000 pounds)= $ 4,800 F
3.) Total material variance=Standard cost –actual cost
0.25 *98400*$8-24,000* $8.40
=$ 4,800 U
4.) Labour Rate Variance=Standard cost of the actual time-Actual labour cost
=$7.60/hour*50,000 hours-$ 3,90,000
=10,000 U
5.) Labour Efficiency Variance=Standard cost of the standard time for the actual production-Standard cost of actual time
=$ 7.60* 0.5 hours*98,400 units-$7.60/hour*50,000 hours
=$ 3,73,920-$3,80,000= $ 6080 U
6.)Total labour variance=Standard cost- Actual cost
=$ 3.80* 98,400 units-$ 3,90,000
=$ 16,080 U
Standard
Price per
Pound
(A)
Standard
Material
Quantity
For Actual
Output(B)
Standard
Cost for
Actual
Output
C=(A)*(B)
Actual
Price
Per
Pound
(D)
Actual
Material
Quantity
Used
(E)
Actual
Cost
F=D*E
Product
$ 7/pound
2200 pounds
(4pounds*550 units)
$ 15,400
$7.30/pound
2100 pounds
$ 15,330
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