Vitex, Inc. manufactures a popular consumer product and it has provided the foll
ID: 2558557 • Letter: V
Question
Vitex, Inc. manufactures a popular consumer product and it has provided the following data excerpts from its standard cost system Standard Cost (1) Standard Quantity or Hours Standard Price or Rate Inputs per Direct materials Direct labor Variable manufacturing overhead Total standard cost per unit 2.30 pounds 1.00 hours 16.60 pound 38.18 $15.50 per hour $15.50 9.50 per hour 9.50 $63.18 1.00 hours Total Variances Reported Standard Price Quantity or Cost* or Rate Efficiency Direct materials Direct labor $610,880 $11,252 F $33,200 U $248,000 $ 3,400 U $15,500 U Variable manufacturing overhead $152,000 $ 4,500F $ 'U Applied to Work in Process during the period The company's manufacturing overhead cost is applied to production on the basis of direct labor-hours. All of the materials purchasedExplanation / Answer
1)Units produced = Standard cost of direct material /standard direct material cost per unit
= 610880/ 38.18
= 16000 Units
2)Material quantity variance =SR[AQ-SQ]
33200 = 16.60 [ AQ- (16000* 2.30)]
33200/16.60 = [AQ- 36800]
2000+36800 =AQ
Actual quantity purchased and used : 38800
3)Material rate variance = AQ[AR-SR]
-11252 =38800[AR-16.60]
-11252/38800 = AR- 16.60
- .29+16.60= AR
Actual cost per pound = $ 16.31 per pound
4)Labor efficiency variance = SR[AH-SH]
15500 = 15.5 [AH-(16000*1)]
15500/15.5 =AH-16000
Actual hours = 1000+16000= 17000 hours
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