Silmon Corporation makes a product with the following standard costs: In June th
ID: 2479463 • Letter: S
Question
Silmon Corporation makes a product with the following standard costs:
In June the company produced 4,500 units using 19,250 grams of the direct material and 2,490 direct labor-hours. During the month the company purchased 24,400 grams of the direct material at a price of $6.80 per gram. The actual direct labor rate was $14.60 per hour and the actual variable overhead rate was $3.90 per hour. The materials price variance is computed when materials are purchased. Variable overhead is applied on the basis of direct labor-hours.
1. Compute the following variances for raw materials, direct labor, and variable overhead, assuming that the price variance for materials is recognized at point of purchase: (Input all amounts as positive values. Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)
Silmon Corporation makes a product with the following standard costs:
Explanation / Answer
a)Material quantity variance = SR [AQ-SQ]
= 7 [ 19250 - (4500 * 4)]
= 7 * 1250
= 8750 U
B)Material price variance = AQ[AR-SR]
= 24400 [ 6.8 -7]
=- 4880 F
C)Labor efficiency variance = SR [AH-SH]
= 14 [2490 - (4500*.5)]
= 14 * 240
= 3360 U
D)Labor price variance = AH [AR-SR]
= 2490 [ 14.6 -14]
= 1494 U
E) Efficiency variance = SR [AH -SH]
= 4 [ 2490 - (4500*.5)]
= 4 *240
= 960 U
F)Variable rate variance = ah [ar-sr]
= 2490 [3.9 - 4]
= 2490 * -.1
= - 249 F
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