Gourmet, Inc. produces containers of frozen food. During October the company had

Question

Gourmet, Inc. produces containers of frozen food. During October the company had the following actual production and costs Actual Containers produced in October Variable Overhead Fixed Overhead Direct Labor cost Actual material purchased Actual Material pounds used 725 $5,500 $14,000 $75,600 Which is $33,000 Which is 4,000 Direct labor hours 15,000 pounds 14,900 pounds Overhead is budgeted and applied using direct-labor hours. Standard cost and annual budget information are as follows Standard cost per container 5 hours Direct Labor Direct Material $18 $2 $90 $40 at 20 pounds at Direct labor 5 hours Direct labor 5 hours Variable overhead at $1.50 $7.50 $3 Fixed Overhead Total at $152.50 Budgeted Monthly Fixed Overhead $12,500 Required: Make sure you do not forget to label the variances U or F. You need to show your work either by cell reference or showing your calculation to the side 1. Calculate the direct materials price and quantity variance Materials price variance Materials Quantity variance 2. Calculate the direct labor rate and efficiency variances Labor rate variance Labor Efficiency variance 3. Calculate the variable overhead spending and efficiency variances Variable overhead spending variance Variable overhead efficiency variance 4. Calculate the fixed overhead budget variance Fixed overhead budget variance

Explanation / Answer

Standard Cost Sheet PU Component Qty Rate Price Direct Material 20 2.00 40 Direct Labor 5 18.00 90 Variable OH 5 1.50 7.5 Fixed OH 5 3.00 15 152.5 Budgeted FO Monthly 12500 Production 725 Actual Cost Component Qty Rate Price Direct Material 14900 2.20 32780 Rate=33000/15000 Direct Labor 4000 18.90 75600 Variable OH 4000 1.375 5500 Fixed OH 4000 3.50 14000 Total 127880 Revised Standard Cost (725) Component Qty Rate Price Material 14500 2.00 29000 Labor 3625 18.00 65250 VOH 3625 1.50 5437.5 FOH 3625 3.00 10875 Total 110562.5 A Material Price Variance: (SP-AP)Actual Qty Consumed -2980 A Material Usage Variance: (SQ-AQ)SP -800 A B Labor Price Variance: (SP-AP)Actual Hours -3600 A Labor Eff Variance: (SH-AH)SP -6750 A C VOH Price Variance: (SP-AP)Actual Hours 500 F VOH Eff Variance: (SH-AH)SP -562.5 A D Fixed OH Budget Variance Budgeted OH 12500 Actual OH 14000 Adverse -1500

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