Silmon Corporation makes a product with the following standard costs: In June th

Question

Silmon Corporation makes a product with the following standard costs: In June the company produced 4.300 units using 16.950 grams of the direct material and 2.470 direct labor, hours. During the month the company purchased 24.200 grams of the direct material at a price of $8.80 per gram The actual direct labor rate was $16.60 per hour and the actual variable overhead rate was $2.90 per hour. The materials price variance is computed when materials are purchased Variable overhead is applied on the basis of direct labor-hours Compute the following variances for raw materials, direct labor, and variance We overhead. assuming that the price variance for materials is recognized at point of purchase: (Input all amounts as positive values. Do not round intermediate calculations. Leave no cells blank - be certain to enter wherever required. Indicate the effect of each variance by selecting "F" for favorable. "U" for unfavorable, and "None" for no effect (l.e., zero varlanco). Omit the "S" sign in your response.) Direct materials quantity variance Direct materials price variance Direct labor efficiency variance Direct labor rate variance Variable overhead efficiency variance Variable overhead rate variance

Explanation / Answer

a. Direct materials quantity variance = [ standard quantity - Actual quantity ] * Standard price

= [ 24200 - 16950] * 9

= $65250

b. Direct materials price variance = [ standard price - actual price] * actual quantity

= [ 9 - 8.80 ] * 16950

= $3390

c. Direct labor efficiency variance = actual hours * standard rate - standard hours * standard rate

Standard hours = 4300 units * 0.5 = 2150 hours

Direct labor efficiency variance = 2470 * 16 - 2150 * 16

= 39520 - 34400 = 5120

d. Direct labor rate variance = Actual quantity * actual rate - actual quantity * standard rate

= 2470 * 16.60 - 2470 * 16

= 41002 - 39520 = 1482

e. Variable overhead efficiency variance = [Standard direct labor hours - actual direct labor hours] * Standard variable overhead rate

= [ 2150 - 2470 ] * 3

= - 960

f. Variable overhead rate variance = [ Standard variable overhead rate - actual variable overhead rate ] * actual units

= [ 3 - 2.90 ] * 2470

= 247.

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