Kropf Inc. has provided the following data concerning one of the products in its
ID: 2580209 • Letter: K
Question
Kropf Inc. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours.
7.4
The company has reported the following actual results for the product for September:
Required:
a. Compute the materials price variance for September.
b. Compute the materials quantity variance for September.
c. Compute the labor rate variance for September.
d. Compute the labor efficiency variance for September.
e. Compute the variable overhead rate variance for September.
f. Compute the variable overhead efficiency variance for September.
Inputs Standard Quantity or Hours per Unit of Output Standard Price or Rate Direct materials7.4
liters $ 7.00 per liter Direct labor 0.70 hours $21.70 per hour Variable manufacturing overhead 0.70 hours $ 5.90 per hourExplanation / Answer
a) Material price variance = (standard price-actual price)actual quantity
= (7*75000-562500)
Material price variance = 37500 U
b) Material usage variance = (standard quantity-actual quantity)standard price
= (9600*7.4-71050)7
Material usage variance = 70 U
c) Labour rate variance = (standard rate-actual rate)actual hours
= (21.70*6410-142302)
Labour rate variance = 3205 U
d) Labour efficiency variance= (standard hours -actual hours)standard rate
= (9600*.7-6410)21.70
Labour efficiency variance = 6727 F
e) Variable overhead rate variance = (standard rate-actual rate)actual hours
= (5.90*6410-34614)
Variable overhead rate variance = 3205 F
f) Variable overhead efficiency variance= (standard hours -actual hours)standard rate
= (9600*.7-6410)5.90
Variable overhead efficiency variance = 1829 F
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