In: Accounting
The general model for calculating a quantity variance is:
Multiple Choice
Actual price × (Actual quantity of inputs used − Standard quantity allowed for output).
Standard price × (Actual quantity of inputs used − Standard quantity allowed for output).
(Actual quantity of inputs used × Actual price) − (Standard quantity allowed for output × Standard price).
Actual quantity of inputs used × (Actual price − Standard price).
The following standards have been established for a raw material used to make product O84:
Standard quantity of the material per unit of output | 8.8 | meters | |
Standard price of the material | $ | 19.00 | per meter |
The following data pertain to a recent month's operations:
Actual material purchased | 5,200 | meters | |
Actual cost of material purchased | $ | 101,490 | |
Actual material used in production | 5,000 | meters | |
Actual output | 670 | units of product O84 | |
The direct materials purchases variance is computed when the materials are purchased.
Required:
a. What is the materials price variance for the month?
b. What is the materials quantity variance for the month?
(Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
Handerson Corporation makes a product with the following standard costs:
Standard Quantity or Hours | Standard Price or Rate | ||||||||||
Direct materials | 9.0 | kilos | $ | 6.50 | per kilo | ||||||
Direct labor | 0.5 | hours | $ | 25.00 | per hour | ||||||
Variable overhead | 0.5 | hours | $ | 6.50 | per hour | ||||||
The company reported the following results concerning this product in August.
Actual output | 3,700 | units | |
Raw materials used in production | 29,530 | kilos | |
Purchases of raw materials | 32,100 | kilos | |
Actual direct labor-hours | 1,110 | hours | |
Actual cost of raw materials purchases | $ | 200,920 | |
Actual direct labor cost | $ | 23,236 | |
Actual variable overhead cost | $ | 8,040 | |
The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
The variable overhead rate variance for August is:
Multiple Choice
$825 U
$825 F
$1,375 F
$1,375 U