Kropf Inc. has provided the following data concerning one of the products in its

Question

Kropf Inc. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours. Standard Quantity or Hours per Unit of tandard Price or Rat 7.00 ber liter Direct materials Direct labor Variable manufacturing liters hours 0.70 21.70 hour 0.70 hours 5.90 er hour The company has reported the following actual results for the product for September Actual o Raw materials Actual cost of raw materials Raw materials used in Actual direct labor-hours hased 75.000 liters purchased 562,50 71.050 iters 6,41 142.30 34,614 tual direct labor cost l variable overhead cost Required: a. Compute the materials price variance for September b. Compute the materials quantity variance for September. c. Compute the labor rate variance for September. d. Compute the labor efficiency variance for September e. Compute the variable overhead rate variance for September. f. Compute the variable overhead efficiency variance for September

Explanation / Answer

a Materials price variance = 562500-(75000*7)= $37500 U b Materials quantity variance = 7*(71050-9600*7.4)= $70 U c Labor rate variance= 142302-(6410*21.7)= $3205 U d Labor efficiency variance=21.7*(6410-9600*0.7)= $6727 F e Variable overhead rate variance=34614-(6410*5.9)= $3205 F f Variable overhead efficiency variance=5.9*(6410-9600*0.7)= $1829 F

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