Hellier Contractors paints interiors of residences and commercial structures. Th

Question

Hellier Contractors paints interiors of residences and commercial structures. The firm's management has established cost standards per 100 square feet of area to be painted.

Direct material ($18 per gallon of paint)

$1.50   

Direct labor

2.00

Variable overhead

0.60

Fixed overhead (based on 600,000 square feet per month)

1.25

Management has determined that 400 square feet can be painted by the average worker each hour. During May, the company painted 600,000 square feet of space and incurred the following costs:

Direct material (450 gallons purchased and used)

$ 8,300.00

Direct labor (1,475 hours)

12,242.50

Variable overhead

3,480.00

Fixed overhead

7,720.00

6. Determine the labor rate variance (LRV) (do not include a negative sign or words in your answer)

7. Determine the labor efficiency variance (LEV) (do not include a negative sign or words in your answer)

8. Determine the Total Labor Variance (do not include a negative sign or words in your answer)

9. Determine the Variable overhead spending variance (do not include a negative sign or words in your answer)

10. Determine the Variable overhead efficiency variance (do not include a negative sign or words in your answer)

11. Determine the Total Variable Overhead Variance (do not include a negative sign or words in your answer)

12. Determine the Fixed overhead spending variance (do not include a negative sign or words in your answer)

13. Determine the Volume variance (do not include a negative sign or words in your answer)

14. Determine the Total Fixed Overhead Variance (do not include a negative sign or words in your answer)

Direct material ($18 per gallon of paint)

$1.50   

Direct labor

2.00

Variable overhead

0.60

Fixed overhead (based on 600,000 square feet per month)

1.25

Explanation / Answer

Working Notes :-

1) Standard data of labour cost

2) Analysis of actua data

3) original standard data and revised standard data

0.25 hour for 100 square feet

(1hour/400*100)

1500 hour for 600000 sqaure feet

(1hour/400*600000)

$2 for 100 square feet

($8*0.25)

$12000 for 600000 square feet

($8*1500)

4) Revised standard data and actuat data

Solution 6 - Labour rate variance

(Standard rate - Actual rate)*Actual hours worked

(8-8.3)*1475 = $442.5 (Unfavourable)

Solution 7 -labour efficiency variance

(Standard hour - Actual hours worked) * Weighted average rate per hour

(1500-1475)*12000/1500 = $200 (Favourable)

Solution 8 - Total labour variance

Total labour variance = Labour rate variance + labour time variance

Total labour variance = Standard labour cost - Actual labour cost

$12000 - $12242.5 = $242.5 (Unfavourable)

Solution - 9 Variable overhead spending variance

Working notes

Actual Variable overhead rate = $3480/1475 hours = $2.39 per hour

Standard variable overhead rate per hour=($0.6/100*400)=$2.4

Variable overhead spending variance

(standard variable overhead rate-actual variable overhead rate)*actual hours worked

($2.4-$2.39)*1475 = $14.75 Favourable

Particulars Direct labour cost per 100 square feet $2 Total labour hour to complete 400 square feet 1 hour Labour cost for 400 sqaure feet ($2/100*400) $8 Hence labour cost per hour (400 square feet) $8

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