Harmon Household Products, Inc., manufactures a number of consumer items for gen
ID: 2452984 • Letter: H
Question
Harmon Household Products, Inc., manufactures a number of consumer items for general household use. One of these products, a chopping board, requires an expensive hardwood. During a recent month, the company manufactured 3,900 chopping boards using 2,301 board feet of hardwood. The hardwood cost the company $17,488.
The company’s standards for one chopping board are 0.53 board feet of hardwood, at a cost of $8.00 per board foot.
According to the standards, what cost for wood should have been incurred to make 3,900 chopping blocks? How much greater or less is this than the cost that was incurred?
Materials Price Varience
Materials Quantity Varience
Break down the difference computed in (1) above into a materials price variance and a materials quantity variance.(Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)
Harmon Household Products, Inc., manufactures a number of consumer items for general household use. One of these products, a chopping board, requires an expensive hardwood. During a recent month, the company manufactured 3,900 chopping boards using 2,301 board feet of hardwood. The hardwood cost the company $17,488.
Explanation / Answer
1) Materials price variance = (Actual price - Standard Price) *Actual Quantity
Materials price variance = (17488/2301 - 8)*2301
Materials price variance = $ 920 Favorable
2). Materials usage/quantity variance = (Actual Quantity Used- Standard Quantity)Standard Price
Materials usage/quantity variance = (2301-3900*0.53)*8
Materials usage/quantity variance = $ 1872 Unfavorable
Break down the difference computed in (1) above into a materials price variance and a materials quantity variance
Number of Chopping Blocks 3900 Number of Board Feet per Chopping Block 0.53 Standard Board Feet Allowed 2067 Standard Cost Per Board 8 Actual Cost Incurred 17488 Standard Cost 16536 Spending Variance - Unfavorable 952Related Questions
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