Budgeted Information Direct Materials: Pewter - 1 pound per unit @ $3.00 per pou

Question

Budgeted Information

Direct Materials:

    Pewter - 1 pound per unit @ $3.00 per pound

    Paint - 2 ounces per unit @ $.75 per ounce

Direct Labor:

    1 hour per unit at @ $9.00 per hour

Other:

    Budgeted Sales Price - $21.00 per unit

    Budgeted units - 100,000

    Budgeted Factory Overhead - $200,000

Actual Results

Direct Materials:

    Pewter - .9 pounds per unit @ $3.25 per pound

    Paint - 2.2 ounces per unit @ $.70 per ounce

Direct Labor:

    1.1 hours per unit at @ $10.00 per hour

Other:

    Actual Sales Price - $19.00 per unit

    Actual units - 95,000

    Actual Factory Overhead - $190,000

2. For the Direct Materials and Direct Labor Variances in the Flexible Budget Variance column further

     break those variances down into their price and efficiency components.

              

Budgeted Information

Direct Materials:

    Pewter - 1 pound per unit @ $3.00 per pound

    Paint - 2 ounces per unit @ $.75 per ounce

Direct Labor:

    1 hour per unit at @ $9.00 per hour

Other:

    Budgeted Sales Price - $21.00 per unit

    Budgeted units - 100,000

    Budgeted Factory Overhead - $200,000

Actual Results

Direct Materials:

    Pewter - .9 pounds per unit @ $3.25 per pound

    Paint - 2.2 ounces per unit @ $.70 per ounce

Direct Labor:

    1.1 hours per unit at @ $10.00 per hour

Other:

    Actual Sales Price - $19.00 per unit

    Actual units - 95,000

    Actual Factory Overhead - $190,000

2. For the Direct Materials and Direct Labor Variances in the Flexible Budget Variance column further

     break those variances down into their price and efficiency components.

              

Explanation / Answer

Direct material price variance= Actual quantity used×(Standard cost per unit-Actual cost per unit) Pewter=Standard cost per unit=pounds per unit× standard rate per pound Standard rate per pound =$3 Paint=Standard cost per unit=ounces per unit×standard rate per ounce Paint=$0.75 per ounce Actual units produced=95,000 Actual cost of pewter per unit=$3.25×1 pound=$3.25 Actual cost oof paint per unit=$0.7×2 ounces=$1.40 Actual quantity used: Actual Qty for 95,000 units produced Actual cost( per pound/ounce) Actual cost Pewter 0.9 pounds            85,500 $3.25    277,875 Paint 2.2 ounce          209,000 $0.70    146,300 Standard cost and standard quantity for actual units produced: Standard Qty for 95,000 units produced Std. cost( per pound/ounce) Standard cost Pewter 1 pounds            95,000 $3.00 $285,000 Paint 2 ounces          190,000 $0.75 $142,500 Direct material price variance=Actual quantity used ×(standard cost per unit-actual cost per unit) Pewter Direct material price variance: =85,500×($3-$3.25) =$21,375 Adverse Paint Direct material price variance: =209,000×($0.75-$0.70) =$10,450 Favorable Direct material quantity variance=Standard cost per ounce/pound ×(standard quantity for actual production-Actual quantity used) Pewter Direct material quantity variance: =$3×(95,000-85,500) =$28,500 Favorable Paint Direct material quantity variance: =$0.75×(190,000-209,000) =$14,250 Adverse Direct labor price variance: Standard labor hours for production of 95,000 units 1hour per unit=95,000×1 hour=95,000 hours Standard labor cost per hour=$9.00 per hour Actual labor hours taken=1.1 hours per unit= (95,000×1.1)=104,500 hours Actual labor cost per hour= $10 per hour Direct labor rate variance=Actual direct labor hours×(standard labor rate per hour-Actual labor rate per hour)            '=104,500×($9-$10)            '=$104,500 Adverse Direct labor efficiency variance=standard labor cost per hour×(standard labor hours-actual labor hours) =$9.00×(95,000-104,500) =$85,500 Adverse Fixed manufacturing overhead variance: Fixed overhead budget variance=Actual overhead-Budgeted overhead =$190,000-$200,000 =$10,000 Favorable

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