The Thompson Company uses standard costing and has established the following dir

Question

The Thompson Company uses standard costing and has established the following direct material and direct labor standards for each unit of Lept. Direct materials: 2 gallons at $4 per gallon Direct labor: 05 hours at $8 per hour During September, the company made 6,000 Lepts and incurred the following costs: Direct materials purchased: 13,400 gallons at $4.10 per gallon Direct materials used: 12,600 gallons Direct labor used: 2,800 hours at $7.65 per hour What is the variable overhead rate variance for the month? $5,885 F $1, 220F $5,885 U $1, 220 U The labor efficiency variance for September was: $1,600 favorable $22,400 favorable $33,600 favorable $3,200 favorable The materials quantity variance for September was: $5,740 unfavorable $5,600 unfavorable $2,460 unfavorable 52,400 unfavorable The labor rate variance for September was:

Explanation / Answer

The Thompson Company All Amounts in $ 25. Variable Overhead Rate Variance cannot be calculated as information about the variable overheads is not provided for in the problem. 26. Labour Efficiency Variance = (Standard Labor Hours - Actual Labor Hours) X Standard Rate per labor hour Standard Labor hours = 0.5 X 6,000 = 3,000 hours Hence, Labor Efficiency Variance = (3,000 - 2,800) X $ 8 = $ 1,600 favorable 27. Materials Quantity Variance = (Standard RM Quantity - Actual RM Quantity) X Standard rate per unit Standard RM Quantity = 2 X 6,000 = 12,000 gallons Hence, Materials Quantity Variance = (12,000 - 12,600) X $ 4 = $ 2,400 Unfavorable

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