Beach Boys Company makes a product with the following standard costs: In June th

Question

Beach Boys Company makes a product with the following standard costs:

In June the company produced 4,200 units using 15,790 grams of the direct material and 2,460 direct labor-hours. During the month the company purchased 24,100 grams of the direct material at a price of $7.80 per gram. The actual direct labor rate was $15.60 per hour and the actual variable overhead rate was $1.90 per hour. The materials price variance is computed when materials are purchased. Variable overhead is applied on the basis of direct labor-hours.

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

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.)

Direct materials quantity variance

Direct materials price variance

Direct labor efficiency variance

Direct labor rate variance

Variable overhead efficiency variance

Variable overhead rate variance

Beach Boys Company makes a product with the following standard costs:

Explanation / Answer

Direct material quantity variance = (4200*3.7-15790)*8 = 2000 U

Direct material price variance = (8-7.80)*24100 = 4820 F

Direct labour efficiency variance = (4200*.50-2460)*15 = 5400 U

Direct labour rate variance = (15-15.60)*2460 = 1476 U

Variable overhead efficiency variance = (4200*.50-2460)*2 = 720 U

Variable overhead rate variance = (2-1.90)*2460 = 246 F

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