Barbaro Production Company has developed the following standards for one of its
ID: 2431225 • Letter: B
Question
Barbaro Production Company has developed the following standards for one of its products:
STANDARD VARIABLE COST CARD
One Unit of Product
Materials: 30 square feet × $5 per square foot $150.00
Direct labor: 16 hours × $7 per hour 112.00
Variable manufacturing overhead: 16 direct labor hours × $5 per hour 80.00
Total standard variable cost per unit $342.00
The company records materials price variances at the time of purchase. The following activity occurred during the month of April:
Materials purchased: 80,000 sq. feet at $5.30 per sq. foot
Materials used: 74,000 square feet
Units produced: 2,500 units
Direct labor: 42,000 hours at $6.70 per hour
Actual variable manufacturing overhead: $228,000
Required:
a. Calculate the direct materials price variance.
b. Calculate the direct materials usage variance.
c. Calculate the direct labor rate variance.
d. Calculate the direct labor efficiency variance.
e. Calculate the variable overhead spending variance.
f. Calculate the variable overhead efficiency variance.
Explanation / Answer
a. Direct Material Price Variance = (Standard Price-Actual Price)*Actual Material quantity purchased = (5.00-5.30)*80000 = $ 24,000 Unfavorable b. Direct Material Usage Variance = (Standard Quantity-Actual Qauntity used)*Standard Price = (75000-74000)*5.00 = $ 5,000 Favorable Working: Standard Quantity for actual output = Actual Output*Standard Quantity per unit = 2500 * 30 = 75000 c. Direct Labor rate Variance = (Standard Rate-Actual Rate)*Actual Direct Labor hours used = (7.00-6.70)*42000 = $ 12,600 Favorable d. Direct Labor usage Variance = (Standard Direct Labor hours-Actual direct Labor hours)*Standard direct Labor rate = (40000-42000)*7.00 = $ 14,000 Unfavorable Working: Standard direct labor hours = Actual Output*Standard labor hours per unit = 2500 * 16 = 40000
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