Hamline Manufacturing makes a single product. Standard costs are given below. Ma
ID: 2526527 • Letter: H
Question
Hamline Manufacturing makes a single product. Standard costs are given below.
Manufacturing Cost Elements Quality * Price = Cost
Direct Materials 6 oz. * $0.90 = $5.40
Direct Labor 0.5hrs * 12.00 = 6.00
Manufacturing overhead 0.5hrs * 4.80 = 2.40
$13.80
During the month, the following transactions occurred in manufacturing 10,000 units.
58,000 ounces of materials were purchased at $1.00 per ounce.
All the materials purchased were used to produce the 10,000 units.
4,900 direct labor hours were worked at a total labor cost of $56,350.
Variable manufacturing overhead incurred was $15,000 and fixed overhead incurred was $10,400.
Compute the total variance and the variances for direct materials and direct labor elements.
Explanation / Answer
Material price variance AP (a) SP (b) Variance (c=b-a) AQ (d) Total variance (e=c*d) F/U Material price variance = (AP-SP)*AQ AP = Actual price per unit = $1 SP = Standard price per unit = $0.9 AQ = Actual quantity consumed= 58000 F= Favourable U = Unfavourable Material price variance AP (a) SP (b) Variance (c=b-a) AQ (d) Total variance (e=c*d) F/U 1 0.9 -0.1 58000 -5800 U Material quantity variance AQ (a) SQ (b) Variance (c=b-a) SP (d) Total variance (e=c*d) F/U Material quantity variance = (AQ-SQ)*SP AQ = Actual quantity consumed= 58000 SQ = Standard quantity = 10000*6 = 60000 SP = Standard price per unit = $0.9 F= Favourable U = Unfavourable Material quantity variance AQ (a) SQ (b) Variance (c=b-a) SP (d) Total variance (e=c*d) F/U 58000 60000 2000 0.9 1800 F Total Material variance Total Actual Total Std Total variance F/U 58000 54000 -4000 U (58000*1) (10000*6*0.9) Labor Rate variance AR (a) SR (b) Variance (c=b-a) AH (d) Total variance (e=c*d) F/U Labor Rate variance = (AR-SR)*AH AR = Actual Rate per hour = 56350/4900 = $11.5 SR = Standard Rate per hour = $12 AH = Actual hours = 4900 F= Favourable U = Unfavourable Labor Rate variance AR (a) SR (b) Variance (c=b-a) AH (d) Total variance (e=c*d) F/U 11.5 12 0.5 4900 2450 F Labor Efficiency variance AH (a) SH (b) Variance (c=b-a) AR (d) Total variance (e=c*d) F/U Labor Efficiency variance = (AH-SH)*AR AH = Actual hours = 4900 SH = Standard Hours = 10000*0.5 = 5000 SR = Standard Rate per hour = $12 F= Favourable U = Unfavourable Labor Efficiency variance AH (a) SH (b) Variance (c=b-a) SR (d) Total variance (e=c*d) F/U 4900 5000 100 12 1200 F Total Labor variance Total Actual Total Std Total variance F/U 56350 60000 3650 U (10000*0.5*12)
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