Silmon Corporation makes a product with... Silmon Corporation makes a product wi

Question

Silmon Corporation makes a product with... Silmon Corporation makes a product with the following standard costs: In June the company produced 4,900 units using 28,690 grams of the direct material and 2,650 direct labor- hours. During the month the company purchased 24,800 grams of the direct material at a price of $4.80 per gram. The actual direct labor rate was $12.60 per hour and the actual variable overhead rate was $1.90 per hour. The materials price variance is computed when materials are purchased. Variable overhead is applied on the basis of direct labor-hours. Required: Compute the following variances for raw materials, direct labor, and variable overhead, assuming that the price variance for materials is recognized at point of purchase: (Input all amounts as positive values. Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Explanation / Answer

Silmon Corporation Standard Quantity or Hours Standard Price or rate Direct Material 5.6 Grams $5 Per Gram Direct Labor 0.5 Hours $12 Per Hours Variable Overhead 0.5 Hours $2 Per Hours Actual Quantity Or Hours Actual Price or Rate Actual Production 4900 Units Actual Direct Material 28690 Actual Direct Material Purchase 24800 Grams $       4.80 Per Gram Actual direct Labor Hours 2650 Hours $    12.60 Per Hours Variable Overhead 2650 Hours $       1.90 Per Hours Direct Material Quantity Variance=SP(AQ-SQ) SQ= 27440 Grams AQ= 28690 Grams SR= $5 Per Gram Direct Material Quantity Variance= ($6,250) (U) ) Material Price Variance=AQ(AP-SP) AQ= 24800 SP= $5 AP= $4.80 Material Price Variance= $4,960.00 (F) Direct Labor Efficiency Variance=SR(AH-SH) Standard Hours= 2450 Direct Labor Efficiency Variance= 2400 (U) Direct Labor Rate Variance=AH(AR-SR) $1,590 (U) Varable Overhead Efficiency Variance=SR(AH-SH) $              400.00 (U) Variable Overhead Rate Variance=AH(AR-SR) ($265) (F)

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