The standards for one case of liquid weed killer are as follows Direct materials

Question

The standards for one case of liquid weed killer are as follows Direct materials Direct labor Variable overhead (based on machine hours) 5 lb @ S6 75?? 3.2 hr @ $14.4/hr 1.1 hr $4.95/hr During the week ended May 6, the following activity took place: 3,574 machine hours were worked. 17,271 lb of raw material were purchased for inventory at a total cost of $118,997. 3,420 cases of finished product were produced. 17.012 lb of raw material were used. 10,703 labor hours were worked at an average rate of $14.63 per hour. $17,084 actual variable overhead costs were incurred. Required: Calculate each of the following variances. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) a. Price variance for raw materials purchased. b. Raw materials usage variance c. Direct labor rate variance. d. Direct labor efficiency variance. e. Variable overhead spending variance f. Variable overhead efficiency variance

Explanation / Answer

Material price variance = (6.75*17271-118997) = 2417.75 U

Material usage variance = (3420*5-17012)*6.75 = 594 F

Direct labour rate variance = (14.40-14.63)*10703 = 2461.69 U

Direct labour efficiency variance = (3420*3.2-10703)*14.4 = 3470.40 F

Variable overhead spending variance = (4.95*3574-17084) = 607.30 F

Variable overhead efficiency variance = (3420*1.1-3574)*4.95 = 930.60 F

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