lul MeGraw-Hill\'s Connecf Accounting 10-9 Comprehensive Variance Analysis (L010
ID: 2549006 • Letter: L
Question
lul MeGraw-Hill's Connecf Accounting 10-9 Comprehensive Variance Analysis (L010-1, L010-2, LO10-3) nc., manufactures auto accessories. One of the company's products is a set of seat be adjusted to fit nearly any small car. The company has a standard cost system wers thal of its products. According to the standards that have been set for the seat covers, the in usei hould ork 2.850 hours each month to produce 1,900 sets of covers. The standard costs facro ated with this level of production are Per Set Total of Covers Direct materials. Direct labor Variable manufacturing overhead ....$42,560 $22.40 9.00 (based on direct labor-hours) . $6,840 3.60 $35.00 August, the factory worked only 2.800 direct labor-hours and produced 2,000 sets of cov- ers. The following actual costs were recorded during the Per Set Total of Covers Direct materials (12,000 yards) 9.10 3.50 $35.40 $18,200 Direct labor.... Variable manufacturing overhead At standard, each set of covers should require 5.6 yards of material. All of the materials purchased during the month were used in production. Required: Compute the following variances for August: I. The materials price and quantity variances. 2. The labor rate and efficiency variances. 3. The variable overhead rate and efficiency variances.Explanation / Answer
Req 1: Std quantity per unt required: 5.6 yards Actual output: 2000 sets Std quantity required: 2000*5.6 = 11200 yards Std price per unit(22.40/5.6): 4 per yard Actual price per yard: 45600/12000= $3.80 per yard Actual quantity used: 12000 yards Material Pprice variance: Actual qty (Std price-Actual price) 12000 (4.00-3.80) = $ 2400 F Material Quantity Variance = Std price (Syd quantity -Actual Quantity) 4.00 (11200-12000)+ $3200 U Req 2: Std labour hour per unit: 1.5 hour Std labour allowed: 3000 hours Actual labour hours: 2800 hours Actual labour rate: 18200/2800 =6.50 Std rate per hour: (9.00/1.5) = $ 6.00 per hour Labour rate variance= Actual hours (Std rate-Actual rate) 2800 (6.00-6.50) = $ 1400 U Labour efficiency: Std rate (Std hours -Actual hours) 6.00 (3000-2800)= $1200 F Req 3: Std variable OH rate per hour: $ 3.60 /1.5= $ 2.40 Actual rate: 7000/2800= $2.50 per hour Variable OH rate variance: Actual labour hours (9Std rate-Actual rate) 2800 (2.40-2.50) = $ 280 U Varaiable OH efficiency variance= STd rate (Std hours -Actual hours) 2.40 (3000-2800)= $ 480 F
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