P lease read the whole document carefully and answer the assignment: Balderson C
ID: 2484070 • Letter: P
Question
Please read the whole document carefully and answer the assignment:
Balderson Co. has a budgeted monthly capacity of 20,000 direct labor hours with a standard production of 10,000 units at that capacity.
Standard cost cards reflect the following:
Materials..............................3 pounds @ $1.10 per pound.
Labor...................................$14.50 per hour
Overhead at normal capacity....................Fixed=$20,000, Variable=$ 5.00 per labor hour.
During the month, 30,000 pounds of material were purchased at a cost of $1.00 per pound. 9500 units were produced using 29,200 pounds of material. Labor hours required to complete the job were 19,500 at a total cost of $292,500. Actual factory overhead for the month was $113,000.
Required: Determine the following variances. Show all work for partial credit.
1. Material purchase price variance
2. Material price usage variance
3. Material quantity variance
4. Labor rate variance
5. Labor efficiency variance
6. Factory overhead using the 3-variance method.
Please read carefully about 3 variance method that you need to follow for the Question 6
Factory overhead analysis:
Three variance method----
SV = ACTUAL OVERHEAD OF $25,250 - BUDGETED OVERHEAD AT ACTUAL HOURS OF $24,900 = $350 UNFAVORABLE....again we were over budget. The budget this time is determined by taking the same fixed dollar amount of overhead, since fixed never changes, and adding the variable per unit cost [14,500 ah x $1.20]= $17,400.
ICV = BUDGET AMOUNT OF $24,900 FROM ABOVE - [ACTUAL HOURS OF 14,500 X THE STANDARD RATE OF $1.70] $24,650 = $250 UNFAVORABLE.....again we did not work to our normal capacity.
EV = ACTUAL HOURS x STANDARD RATE FROM ABOVE= $24,650 less APPLIED , WHICH WE ALREADY DETERMINED TO BE $23,800 =
$850 UNFAVORABLE....we were not efficient since it was supposed to take 14,000 hours but it took 14,500 hours.
Please see the problem and 100% correct answer for the similar 1-5 questions for a previous solution and apply for the question 1-5 using the same method for the new assignment:
Cost Accounting Problem: Material and labor variances: Complete the following:
The following data pertain to the first week of operations during June:
Materials:
Actual purchases........................................1500 units @$3.80/unit
Actual usage...............................................1350 units
Standard usage...........................................1020 units @$4.00/unit
Labor:
Actual hours...............................................310 hours @ $12.10/hour
Standard hours...........................................340 hours @ $12.00/hour
Complete the three material variances and the two labor variances.
Please use the formulas below:
The following are the formulas for the variances. For brevity purposes A stands for Actual and S stands for Standard. C stands for Cost, Q stands for Quantity, R stands for Rate, and H stands for Hours.
MATERIAL PURCHASE PRICE VARIANCE
AQ x [ AC - SC ]
Measures the relationship between the price we paid for all purchased materials against the cost we should have paid.
MATERIAL PRICE USAGE VARIANCE
Same formula...........................this one is the amount used as opposed to the first formula which is the amount bought.
Same except just for the amount we used during this time frame.
MATERIAL QUANTITY VARIANCE
SC x [ AQ - SQ ]
Measures how much material we used against what we should have used. Often an indication of how careful our laborers were and how much was wasted.
LABOR RATE VARIANCE
AH x [ AR - SR ]
Measures actual rate/hour paid to the direct laborers against what it should have been. Often is too high due to unbudgeted overtime.
LABOR EFFICIENCY VARIANCE
SR x [ AH - SH ]
Remember to label each F or UF. Find all five variances.
Accurate Answers by another Chegg expert:
1.
MATERIAL PURCHASE PRICE VARIANCE
AQ x [ AC - SC ]
= 1350 ( 3.80 - 4) = $270 F
2. MATERIAL PRICE USAGE VARIANCE
AQ x [ AC - SC ]
= 1500 ( 3.80 - 4) = $300 F
3.
MATERIAL QUANTITY VARIANCE
SC x [ AQ - SQ ]
= 4 ( 1350 - 1020) = $1320 UF
4.
LABOR RATE VARIANCE
AH x [ AR - SR ]
= 310 ( 12.10 - 12) = $31 UF
5.
LABOR EFFICIENCY VARIANCE
SR x [ AH - SH ]
= 12 * (310 - 340) = $360 F
Explanation / Answer
Balderson Co. All Amounts in $ 1. Material Purchase Price Variance = (Standard price per unit - Actual price per unit) X Actual quantity of RM purchased = ($ 1.10 - $ 1) X 30,000 = 3000 F 2. Material Price Usage Variance = (Standard price per unit - Actual price per unit) X Actual quantity of RM used in production = ($ 1.10 - $ 1) X 29,200 = 2920 F 3. Material Quantity Variance = (Standard Quantity required - Actual quantity used) X Standard rate per unit of RM = ((9,500 X 3) - 29,200) X $ 1.1 = -770 U 4. Labor Rate Variance = (Standard Rate per labor hour - Actual Rate per labor hour) X Actual No.of Hours worked Actual Rate per labor hour = $ 292,500 / 19,500 = 15 $ per labor hour Hence, Labor Rate Variance = ($ 14.50 - $ 15) X 19,500 = -9750 U 5. Labor Efficiency Variance = (Standard Hours required - Actual Hours taken) X Standard Rate per labor hour = ((9,500 X 2) - 19,500) X $ 14.50 = -7250 U 6. Factory Overhead Variance (i) Spending Variance Actual Factory Overhead Cost 113000 Estimated Factory Overheads for Actual Capacity Fixed Cost ($ 20,000 / 10,000 units X 9,500 units) 19000 Variable Cost ($5 X 19,500 hours) 97500 116500 Spending Variance 3500 F (ii) Idle Capacity Variance Estimated Factory Overhead Cost for Actual Capacity 116500 Factory Overhead Applied Cost 117000 (Total $ 20,000 + 5 X 20,000 = $ 120,000 / 20,000 X 19,500) Spending Variance 500 F (iii) Efficiency Variance Factory Overhead Applied Cost 117000 Factory Overhead Charged to Production 117500 Efficiency Variance 500 F
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