The standard costs and variances for direct materials, direct labor, and factory
ID: 2491452 • Letter: T
Question
The standard costs and variances for direct materials, direct labor, and factory overhead for the
month of May are as follows
Variances
Standard Cost Unfavorable Favorable
Direct materials . . . .. . $ 85,000
Price variance . . . . . . . . . . . . . . . . . . . . . . . $5,000
Quantity variance . . . . . . . . . . . . . . . . . . . . . $3,000
Direct labor . . . . . . . . . 150,000
Rate variance . . . . . . . . . . . . . . . . . . . . . . . . 2,700
Efficiency variance . . . . . . . . . . . . . . . . . . . . 6,200
Manufacturing overhead 300,000
Spending variance . . . . . . . . . . . . . . . . . . . . 4,000
Volume variance . . . . . . . . . . . . . . . . . . . 5,000
Determine the actual costs incurred during the month of May for direct materials, direct labor,
and manufacturing overhead.
Explanation / Answer
All Amounts in $ Standard Costing Direct Materials 85000 Direct Labor 150000 Manufacturing Overhead 300000 Actual Direct Material Cost = Standard Direct Material Cost - Favourable Price Variance - Favourable Quantity Variance = 85,000 - 5,000 - 3,000 = $ 77,000. Actual Direct Labor Cost = Standard Direct Labor Cost - Favorable Rate Variance - Favorable Efficiency Variance = 150,000 - 2,700 - 6,200 = $ 141,100. Actual Manufacturing Overheads = Standard Manufacturing Overheads - Favorable Spending Variance - Favorable Volume Variance = 300,000 - 4,000 - 5,000 = $ 291,000.
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