Malden Outdoor Products Inc. produces several products, including handmade large
ID: 2520757 • Letter: M
Question
Malden Outdoor Products Inc. produces several products, including handmade large fiberglass planters for outdoor displays. The firm, which began operations at the beginning of this year, uses a standard cost system. The standard costs for one large planter are: Direct material (3 lbs. @ $8.00) $ 24.00 Direct labor (2 hrs. @ $15.00) 30.00 Variable overhead 24.00 Fixed overhead 6.00 Standard cost per unit $84.00 The $6.00 fixed overhead rate is based on total budgeted fixed overhead costs of $18,000 and estimated sales of 3,000 units. There were no changes in any inventory account during the period. The company produced and sold 3,100 units at the following costs: Direct materials (9,000 lbs.) $ 81,270 Direct labor (6,000 hrs.) 78,000 Variable overhead 76,000 Fixed overhead 16,500 Total production costs incurred $251,770 Calculate the following
1-What is the direct materials price variance
2-What is the direct material quantity vaiance
3- what is the direct labor rate variance
4- what is the direct labor efficiency variance
Explanation / Answer
Particulars Qty/ hours Rate amount Qty/ hours Rate amount Materials 9,300.00 8.00 74,400.00 9,000.00 9.03 81,270.00 Labour 6,200.00 15.0000 93,000.00 6,000.00 13.00 78,000.00 Actual output 3,100.00 Materials reqd (125000*1.7) 9,300.00 Labour hrs reqd (125000*1.7) 6,200.00 DMPV = (SP-AP)*AQ purchased DMPV = (8 - 9.03)9000 DMPV = 9270 U DMQV= (SQ-AQ)SP DMQV= (9300 - 9000)8 DMQV= 2,400 F DLRV= (SR-AR)AH DLRV= (15 - 13)6000 DLRV= 12000 F DLEV = (SH-AH)SR DLEV = (6200 - 6000)15 DLEV = 3000 F
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