Expected manufacturing costs for Imperial Data Devices are as follows: Variable

Question

Expected manufacturing costs for Imperial Data Devices are as follows: Variable Costs Direct material $8.00/unit Direct labor 3.20/unit Variable overhead 2.00/unit Fixed Costs per Month Supervisory salaries $15,000 Factory depreciation 10,700 Other factory costs 4,100 During the period, Imperial produced 12,900 units and incurred the following costs Variable Costs Direct material $102,100 Direct labor 45,360 Variable overhead 25,320 Fixed Costs per Month Supervisory salaries $14,700 Factory depreciation 9,070 Other factory costs 4,470 Prepare a performance report for Imperial Data Devices. (List variable costs before fixed costs. Enter unfavorable variances using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Explanation / Answer

Direct mat'ls price var.
= Flexible budget costs - Actual costs
= (12,900 x 8) – 102,100
= 103,200 – 102,100

= 1100F as the actual cost is less than the budgeted cost

Direct labor rate var.
= Flexible budget costs - Actual costs
= (Actual qty x Std rate) – actual cost
= (12,900 x 3.2) – 45,360
= 41280 – 45,360

= 4080 Unfavorable as the actual cost is more than the budgeted cost

Variable overhead variance

= Flexible budget costs - Actual costs
= (Actual qty x Std rate) – actual cost
= (12,900 x 2) – 25,320
= 25800 – 25320

= 480 F as the actual cost is less than the budgeted cost

Fixed cost variance

= 15000 – 14700 = 300F

Factory depreciation

= 10,700 – 9,070

= 1,630 F

Other factory cost

= 4100 – 4470

= 370 U

The price variance is the total of the direct materials price variance plus the direct labor rate variance
= 1100F + 4080U + 480 F + 300F + 1630F + 370U
= 940U

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