direct materials, direct labor, and variable manufacturing overhead Upon reviewi

Question

direct materials, direct labor, and variable manufacturing overhead Upon reviewing the plant's income statement, Ms. Dunn has concluded that the major problem lles in the varlable cost of Price Standard Cost $ 8.75 2.60 0.40 Direct labor 8.2 hours s 2.00 per hour 33,000 pounds of materials at a cost of $2.95 per pound b. Used 27,800 pounds of materials in pr (Finished goods and work in process inventories are 3,800 direct labor-hours at a cost of $6.20 per hour t is the company's policy to close all varlances to cost of goods sold on a monthly basis

Explanation / Answer

14850 Unfavorable.

500 Favorable.

3900 Unfavorable.

600 Unfavorable variance

1.Material Price Variance (AP - SP) X AQ ( 2.95- 2.5 ) X 33000 pounds

14850 Unfavorable.

Material Quantity variance (AQ- SQ) X SP (27800-28000) X 2.50= -500.

500 Favorable.

Labour Rate Variance (AR - SR) X Actual Hours ( 6.2- 6.5 ) X 3800 Hours -1140 1140 Favorable Labour Efficiency variance (Actual hours- Standard hours) X Std Rate (3800- 3200 ) X 6.5 3900

3900 Unfavorable.

Variable Overhead Spending Variance Actual total variable oh incurred for june 4560 minus: Budgeted variable oh based on inputs used 3800 ( 1900 X 2 ) 760 760 Unfavorable Variable OH efficiency Variance Budgeted variable oh based on inputs used 3800 Less: Standard Variable oh allowed for actual output 3200 ( 8000 X 0.2hours X 2.per hour) 600

600 Unfavorable variance

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