Silmon Corporation makes a product with the following standard costs: Standard Q

Question

Silmon Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Direct materials 5.9 grams $ 8.00 per gram Direct labor Variable 0.5 hours hour 0.5 hours $3.00 per hour overhead In June the company produced 5,200 units using 31,530 grams of the direct material and 2,680 direct labor-hours. During the month the company purchased 25,100 grams of the direct material at a price of $7.80 per gram. The actual direct labor rate was $15.60 per hour and the actual variable overhead rate was $2.90 per hour. The materials price variance is computed when materials are purchased. Variable overhead is applied on the basis of direct labor-hours. Required Compute the following variances for raw materials, direct labor, and variable overhead, assuming that the price variance for materials is recognized at point of purchase: (Input all amounts as positive values. Do not round intermediate calculations. Leave no cells blank-be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Explanation / Answer

Standard Actual Particulars Qty/ hours Rate amount Qty/ hours Rate amount Materials            30,680.00                     8.00          245,440.00            31,530.00                   7.80            245,934.00 Labour               2,600.00              15.0000            39,000.00               2,680.00                15.60               41,808.00 Overhead               2,600.00                     3.00               7,800.00               2,680.00              2.9000                 7,772.00 Actual output               5,200.00 Materials reqd (5200*5.9)            30,680.00 Labour hrs reqd (5200 * .50)               2,600.00 DMPV = (SP-AP)*AQ purchased DMPV = (8 - 7.80)25100 DMPV = 5020 F DMQV= (SQ-AQ)SP DMQV= (30680 - 31530)8 DMQV= 6800 U DLRV= (SR-AR)AH DLRV= (15 - 15.60)2680 DLRV= 1608 U DLEV = (SH-AH)SR DLEV = (2600 - 2680)15 DLEV = 1200 U VORV = (SR-AR)AH VORV = (3 - 2.9)2680 VORV = 268 F VOEV = (SH-AH)SR VOEV = (2600 - 2680)3 VOEV = 240 U

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