Standard Products Company recognizes variences from standards at the earliest op

Question

Standard Products Company recognizes variences from standards at the earliest opportunity, and the quality of direct materials purchased is equal to the quantity used. The following information is available for the most recent month:

1. Calculate the Direct Material Price and Volume Variances.

2. Calculate the Direct Labor Rate and Efficiency Variances

3. Calculate the Variable Overhead Spending and Efficiency Variances

4. Calculate the Fixed Overhead Budget and Volume Variances

Direct Materials Direct Labor Standard quantity/ unit 6.00 pounds 2.5 hours Standard price/ pound $8.10 / pound Standard price / hour $8.00 / hour Actual quantity / unit 6.25 pounds 2.8 hours Actual price / pound $8.00 / pound Actual price / hour $7.50 / hour Static budget volume 800 units Actual volume 900 units Actual overhead $11,000 Actual fixed overhead $5.100 Standard variable overhead $5 / unit Standard fixed overhead $5,600

Explanation / Answer

1 Direct Material Price variance ( Standard Price- Actual Price) Actual Qty ( 8.10-8)900*6.25 562.5 Favourable Direct Material Qty Variance ( Standard Qty- Actual Qty) Standard Price ( 800*6-900*6.25)8.10 (4800-5625)8.10 6682.5 Unfavourable Direct Labor Rate Variance ( Standard Price- Actual Price) Actual Hrs ( 8-7.5)*900*2.8 .5*2520 $ 1260 Favourable Direct Labor Efficiency Variance ( Standard Hrs- Actual Hrs) Standard Price ( 800*2.5-900*2.8)8 (2000-2520)8 $ 4160 Unfavourable

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