Short Answer The following standard costs were developed for one of the products

Question

Short Answer The following standard costs were developed for one of the products of Razzmatazz Corporation STANDARD COST CARD PER UNIT Materials: 4 feet x $14.25 per foot Direct labor: 8 hours × $10 per hour Variable overhead: 8 direct labor hours x $8 per hour Fixed overhead: 8 direct labor hours × $12 per hour Total standard cost per unit The following information is available regarding the company's operations for the period: $ 57.00 80.00 64.00 96.00 Units produced: Materials purchased: Materials used: Direct labor: 11,000 52,000 feet @ $13.95 per foot 40,000 feet 84,000 hours costing $840,000 Manufacturing overhead incurred: Variable $756,000 $1,000,000 Fixed manufacturing overhead for the period is $960,000, and the standard fixed overhead rate is based on expected capacity of 80,000 direct labor hours. Required: a. Calculate the materials price variance b. Calculate the materials usage variance. c. Calculate the direct labor rate variance. d. Calculate the direct labor efficiency variance. e. Calculate the variable manufacturing overhead spending variance. . Calculate the variable manufacturing overhead efficiency variance. g. Calculate the fixed manufacturing overhead spending variance. h. Calculate the fixed manufacturing overhead volume variance

Explanation / Answer

a)

Material Price Variance:

Standard rate = 14.25 per foot

Actual rate = 13.95 per foot

Actual quantity purchased = 52000 feet

Material Price Variance = Change in rate *Actual quantity purchased

= (14.25 - 13.95)*52000 = 15600 (favorable)

b)

Material usage variance:

Actual quantity used = 40000

Standard quantity used= 11000*4 = 44000

Standard rate = 14.25 per foot

Material usage variance = Change in quantity*Standard rate

= (44000 - 40000)*14.25 = 57000 (unfavorable)

c)

Direct labor rate variance:

Standard rate = $10 per hour

Actual rate = 840000/84000 = $10 per hour

Actual hours = 84000 hours

Direct labor rate variance = Change in rate*actual hours

= (10 - 10)*84000 = 0

d)

Direct labor efficiency variance:

Actual hours = 84000 hours

Standard hours = 8*11000 = 88000 hours

Standard rate = $10 per hour

Direct labor efficiency variance = Change in efficiency*Standard rate

= (88000 - 84000)*10 = 40000 (favorable)

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