The following report is given for a factory. The company had a plan to make 500

Question

The following report is given for a factory. The company had a plan to make 500 units of K for $1,200 (given below). However, the factory actually made 600 units of K and incurred $1,350 (as shown below). Production of Q Material (variable Labor (fixed) Total Cost Budget 500 units $500 $700 $1,200 Actual 600 units $750 $600 $1,350 The spending variance for all cost together is: A) S330, Favorable B) $150, Unfavorable C) $50, Unfavorable D) $10, Unfavorable 22. The following labor standards have been established for Product X Standard hours allowed for 1 unit of X. 6 hours S17.20 per hour The following data pertain to operations concerning the product for the last month; 8,100 hours, S17.45per hour $141,345 1.400 units Actual production units of X What is the direct labor rate variance for the month? A) $3,135 Favorable B) $2,025 Unfavorable C) S5,160 Favorable D) $137,497 Unfavorable Use the information given in the above question. What is the direct labor efficiency variance? A) $3,135 Favorable B) $2,025 Unfavorable C) $5,160 Favorable D) $137,497 Unfavorable 23.

Explanation / Answer

.21. Spending variance is the difference between budgeted and actual cost.

Budgeted unit=500

Actual unit=600

Budgeted material cost for 500 units=$500

Budgeted material cost per unit=(500/500)=$1

Budgeted material cost for 600 units=600*$1=$600

Actual material cost for 600 units=$750

Spending Variance of materials =(750-600)=$150(Unfavourable)(Actual cost higher than budgeted)

Spending Variable of Labor (Fixed Costs)=(700-600)=$100 (Favourable)(Actual cost lower than budgeted)

Spending variance of all cost together=(100-150)=$50 unfavourable

Answer:

C). $50, unfavourable

.22.Direct Labor Rate Variance:

Direct Labor Rate variance=(Actual Labor hour)*(Standard Rate- Actual Rate)

Standard Rate=$17.20 per hour

Actual Rate=$17.45 per hour

Actual labor hour=8100

Direct labor Rate Variance=8100*(17.45-17.20)= $ 2,025 (Unfavourable) Actual rate is more than the standard rate

Answer:

B) $2,025Unfavourable

.23.Direct Labor Efficiency Variance=Standard Rate*(Standard Hour- Actual hour)

Standard rate=$17.20per hour

Standard Hour for 1400 units=1400*6=8400 hours

Actual hour=8100 hours

Direct Labor Efficiency Variance=17.2*(8400-8100)= $ 5,160 (Favourable) Actual hour is less than standard hours

Answer:

C) $5,160 Favourable

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