The following information is for the standard and actual costs for the Carson Pa
ID: 2463140 • Letter: T
Question
The following information is for the standard and actual costs for the Carson Palmer Corporation.
Standard Costs:
Budgeted units of production - 16,000 (80% of capacity)
Standard labor hours per unit – 4
Standard labor rate $26 per hour
Standard material per unit - 8 lbs.
Standard material cost - $ 12 per lb.
Budgeted fixed overhead $640,000
Standard variable overhead rate - $15 per labor hour.
Fixed overhead rate is based on budgeted labor hours at 80% capacity.
Actual Cost:
Actual production - 16,500 units
Actual fixed overhead - $640,000
Actual variable overhead - $1,000,000
Actual labor - 65,000 hours, total labor costs $1,700,000
Actual material purchased and used - 130,000 lbs, total material cost $1,600,000
Actual variable overhead - $1,000,000
Determine: (a) the quantity variance, price variance, and total direct materials cost variance; (b) the time variance, rate variance, and total direct labor cost variance; and (c) the spending and efficiency variances for the Variable Factory Overhead), and (d) the spending and volume variances for Fixed Factory Overhead. And (e) The total Factory Overhead Controllable Variance.
Explanation / Answer
a) material price variance = (actual quantity used * actual price) - (standard price * actual qauntity used)
= $1600000 - ($12 * 130000lbs)
= $1600000 - $1560000
=$40000 unfavorable
Note:- (actual quantity used * actual price) = total material cost
Quantity variance = (standard quantity allowed * standard price) - (actual quantity used * standard price)
=(132000lbs * $12) - (130000 lbs * $12)
= $1584000 - $1560000
= $24000 favorable
Note:- standard quantity allowed for actual output
= 8lbs / 1 unit * 16500 units
= $132000 lbs
total direct materials cost variance = price variance + quantity variance
= $40000 unfavorable + $24000 favorable
=16000 unfavorable
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.