4. Standard cost systems variance computations Livingston Corporation recently i

Question

4. Standard cost systems variance computations
Livingston Corporation recently implemented a standard cost system. The company’s cost accountant has provided the following data to perform a variance analysis for May:

Compute the following variances. Indicate whether each variance is favorable (F) or unfavorable (U):

(a) Materials price variance: $__________

(b) Materials quantity variance: $__________

(c) Labor rate variance: $__________

(d) Labor efficiency variance: $__________

(e) Overhead spending variance: $__________

(f) Overhead volume variance: $__________

Explanation / Answer

Actual Information Details Actual units Actual Qty/Hr Actual Rate Actual Amt Std Qty/Hr Actual Output Direct Materials          10,400               39,000             11.00       429,000        41,600 Direct Labor          10,400                 4,200               5.50         23,100          5,200 Variable OH          10,400         17,750        18,720 Fixed Overhead          10,400         24,200        20,800 Direct Materials Price Variance= Actual Qty Used( Actual Rate-Std Rate) =39000*(11-12)          39,000 (F) Direct Material Efficiency Variance =Std Rate ( Actual Qty used-Std qty for actual output)   =12*(39000-41600)          31,200 (F) Direct Labor Rate Variance= Actual Hrs Used( Actual Rate-Std Rate) =4200*(5.50-7)            6,300 (F) Direct LAbor Efficiency Variance =Std Rate ( Actual Hrs used-Std Hrs for actual output)   =7*(4200-5200)            7,000 (F) Variable Overhead Rate Variance= Actual Qty Used( Actual Rate-Std Rate) =165000*(1.393939-1.10)=          48,500 (U) Variable Overhead Efficiency Variance =Std Rate ( Actual Qty used-Std qty for actual output)   =1.10*(165000-192000)=          29,700 (F) Total Variable Overhead spending Variance= =230000-211200=        18,800 (U) Fixed Overhead Budget Variance = Actual Overhead- Budgeted allowance based on Std rate onn budgeted units(budgeted fixed OH) =20800+18720-3.8*12000      6,080.00 (F) Fixed Overhead Volume Variance = Budgeted Allowance based on Std units - Actual Output*std rate of Overhead /unit =3.8*12000-10400*3.8      6,080.00 (U)

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