A company uses a standard cost system. One of the mostpopular products is a cent

Question

A company uses a standard cost system. One of the mostpopular products is a center that houses electronic units. The per-unit standard costs of the center, assuming a "normal"volume of 1,000 units per month asre as follows; direct materials, 100 board-feet of wood at $1.30 perfoot................ $130.00 direct labor, 5 hours at $8.00 perhour..............................................     40.00 manufacturing overhead (applied at $22 perunit)..............................       fixed ($15,000/1,000units of normal production0...........$15.00      variable...........................................................................   7.00       22.00          totalstandard unitcost................................................               $ 192.00 During July, 800 centers were scheduled and produced at thefollowing unit costs: direct materials, 100 fee at $1.20 perfoot..................................... $132.00 direct labor, 5 1/2 hours at $7.80 perhour....................................    42.90 manufacturing overhead, $18,480 /800units.................................      23.10     total actual unitcost.................................................................. $198.00 compute the following cost for the month of July: 4. labor efficiency variance 5. overhead spending variance 6. volume variance A company uses a standard cost system. One of the mostpopular products is a center that houses electronic units. The per-unit standard costs of the center, assuming a "normal"volume of 1,000 units per month asre as follows; direct materials, 100 board-feet of wood at $1.30 perfoot................ $130.00 direct labor, 5 hours at $8.00 perhour..............................................     40.00 manufacturing overhead (applied at $22 perunit)..............................       fixed ($15,000/1,000units of normal production0...........$15.00      variable...........................................................................   7.00       22.00          totalstandard unitcost................................................               $ 192.00 During July, 800 centers were scheduled and produced at thefollowing unit costs: direct materials, 100 fee at $1.20 perfoot..................................... $132.00 direct labor, 5 1/2 hours at $7.80 perhour....................................    42.90 manufacturing overhead, $18,480 /800units.................................      23.10     total actual unitcost.................................................................. $198.00 compute the following cost for the month of July: 4. labor efficiency variance 5. overhead spending variance 6. volume variance     total actual unitcost.................................................................. $198.00 compute the following cost for the month of July: 4. labor efficiency variance 5. overhead spending variance 6. volume variance

Explanation / Answer

Labor Efficiency Variance ==================== difference between the amount of labor time that should havebeen used and the labor that was actually used, multiplied by thestandard rate.       =   (5.00hrs x 800 units -   5.50 x 800 units) x $8.00 perunit (Standard labor rate)       =   (4,000hrs   -   4,400units)   x   $8.00      =   $3200U Overhead spending variance ======================             Overheadspendingvariance   =   Actual overheadcost   -   (Standard Rate x ActualOutput)                                                            =   $18,480    -   ($22.00x 800units)                                                            =   $18,480   -   $17,600                                          =      $880U 6. Volume variance      =============             OverheadVolume variance   =   Actual Overhead cost   -   Budgeted OverheadCost                                                         =   $18,480    -   ($22.00x 1000units)                                                         =   $18,480   -   $22,000                                          =      $3,520F Overhead spending variance ======================             Overheadspendingvariance   =   Actual overheadcost   -   (Standard Rate x ActualOutput)                                                            =   $18,480    -   ($22.00x 800units)                                                            =   $18,480   -   $17,600                                          =      $880U 6. Volume variance      =============             OverheadVolume variance   =   Actual Overhead cost   -   Budgeted OverheadCost      =============             OverheadVolume variance   =   Actual Overhead cost   -   Budgeted OverheadCost                                                         =   $18,480    -   ($22.00x 1000units)                                                         =   $18,480   -   $22,000                                          =      $3,520F                                                         =   $18,480    -   ($22.00x 1000units)                                                         =   $18,480   -   $22,000                                          =      $3,520F

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