Help Save&Exit; Check m Koontz Company manufactures a number of products. The st

Question

Help Save&Exit; Check m Koontz Company manufactures a number of products. The standards relating to one of these products are shown below, along w actual cost data for May Cost per Coat Unit Direct materials Standardi 1.80 feet at $2.40 per foot s 4.32 Actual: 1.75 feet at $2.60 per foot Direct labor: s 4.55 Standard: 0.90 hours at $15.00 per hour 13.50 Actuali 0.95 hours at $14.40 per hour 13.68 Variable overhead: Standard: 0.90 hours at $7.00 per hour 6.30 Actual: 0.95 hours at $6.60 per hour Total cost per unit $24.12 24.50 0.38 Excess of actual cost over standard eost per unit e production superintendent was pleased when he saw this report and commented: "This $0.38 excess cost is well within the 5 percent limit management has set for acceptable variances. It's obvious that there's not much to worry about with this product Actual production for the month was 13.500 units. Variable overhead cost is assigned to products on the basis of direct labor hours There were no beginning or ending inventories of materials Required: 1. Compute the following variances for May a. Materials price and quantity variances b. Labor rate and efficiency variances C. Variable overhead rate and efficiency variances 2. How much of the $0.38 excess unit cost is traceable to each of the variances computed in () above. 3. How much of the $0.38 excess unit cost is traceable to apparent inefficient use of labor time? Complete this question by entering your answers in the tabs Next>

Explanation / Answer

1)Material price variance :AQ[AR-SR]

                   = 1.75[2.6-2.4]

                    = .35 U

Material quantity variance =SR[AQ-SQ]

                      = 2.4 [1.75-1.80]

                       = - .12 F

B)Labor rate variance :AH[AR-SR]

             =.95[14.4-15]

                 = -.57 F

Labor efficiency variance =SR[AH-SH]

                          15 [.95-.90]

                           = .75

C)Variable overhead rate variance :AH[AR-SR]

                 .95[6.6-7]

               = - .38 F

Variable overhead efficiency variance =SR[AH-SH]

                          7[.95-.90]

                                 .35

2)

Direct material rate variance .35 Direct material quantity variance -.12 Direct labor rate variance -.57 direct labor efficiency variance .75 variable overhead rate variance -.38 variable ovoerhead efficiency variance .35 Total variance .38

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