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xScience ABC. to.mheducation.com/hm.tpx Mail 1 Academica Apple bBing G Google Yahoo How Many How Many Calories 7.00 points Problem 8-20B Basic Variance Analysis; the Impact of Variances on Unit Costs (LO8-4, LO8-5, LO8-6 Perry Company manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May Cost per Cost per Unt Direct materials 3.24 Standard: 1.80 feet at $1.80 per foot Actual: 1.75 feet at $2 20 per foot $ 3.85 17.48 5.70 Direct labor 7.10 Standard 0.90 hours at $19.00 per hour Actual: 0.95 hours at $18.40 per hour Variable overhead 5.76 Standard: 0.90 hours at $6.40 per hour Actual: 0.95 hours at $6.00 per hour Total cost per unit $26 10 27.03 $0.03 Excess of actual cost over standard cost per unit The production superintendent was plessed when she saw this report and excess cost is wall there's not much to worry about with this product within the 5 percent imit management has set for acceptable variances. I cost is assigned to products on the Actual production for the month was 12,000 units. Variable overhead basis of direct labor-hours. There were no beginning or ending inventories of materials 1. Compute the folowing vaniances for May of each variance by selecting "P- for favorable, "U"for unfavorable, and "None" for no offect Le., zero variance).) a. Materials price and quantity variances (input all amounts as positive values, Indicate the effect Materials price varance b, Labor eate and efficiency variances nput all amounts as positive values Indicase the elect of O Type here to searchExplanation / Answer
1 a Direct Material cost variance Direct Material Price Variance (Standard Price - Actual Price)*Actual Quantity 21000 (1.80-2.20)*21000 -8400 U (1.80-2.20)*1.75 -0.7 U Direct Material quantity variance 21600 (Standard quantity allowed - Actual quantity used)*standard price per unit 21000 (21600-21000)*1.80 1080 F (1.80-1.75)*1.80 0.09 F Direct material cost variance -7320 U b Direct Labor cost variance Direct Labor rate variance 11400 (Standard Rate - Actual Rate)*Actual hours (19-18.40)*11400 6840 F (19-18.40)*0.95 0.57 F Direct Labor efficiency variance (Actual hours worked- standard hours allowed)*Standard rate 10800 (11400-10800)*19 11400 U (0.95-0.90)*19 0.95 U Labor cost variance -4560 U c Variable overhead efficiency variance (Actual hours worked- standard hours allowed)*Standard rate (11400-10800)*6.40 3840 U (0.95-0.90)*6.40 0.32 U Variable overhead rate variance (Standard Rate - Actual Rate)*Actual hours 11400 (6.40-6)*11400 4560 F (6.40-6)*0.95 0.38 F Variable cost variance 720 F 2 Materials Quantity Variance 0.09 F Price Variance 0.7 U 0.61 U Labor Efficiency Variance 0.95 U Rate Variance 0.57 F 0.38 U Variable overhead Efficiency Variance 0.32 U Rate Variance 0.38 F 0.06 F Excess of actual over standard cost per unit 0.93 U 3 Excess of actual over standard cost per unit 0.93 U Less : portion attributable to labor inefficiency Labor Efficiency 0.95 U Variable overhead efficiency variance 0.32 U Portion due to other variances -2.2 U
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