Question

Question 5

Fortes Inc. has provided the following data concerning one of the products in its standard cost system. Materials price variances is calculated on material purchased and materials quantity is based on Material used in production. Variable manufacturing overhead is applied to products on the basis of direct labor-hours.

Inputs	Standard Quantity or Hours per Unit of Output			Standard Price or Rate
Direct materials		10.0	ounces	$	8.10	per ounce
Direct labor		0.5	hours	$	24.70	per hour
Variable manufacturing overhead		0.50	hours	$	6.40	per hour

The company has reported the following actual results for the product for April:

Actual output		7600	units
Raw materials purchased		50,200	ounces
Actual cost of raw materials purchased	$	386,210
Raw materials used in production		76,030	ounces
Actual direct labor-hours		3450	hours
Actual direct labor cost	$	88,880
Actual variable overhead cost	$	21,295

Required:

Enter all numbers as positive and rounded to the nearest dollar
Materials price variance	$
Materials quantity variance	$
Labor rate variance	$
Labor efficiency variance	$
Variable overhead rate variance	$
Variable overhead efficiency variance	$

Answer 1

Materials price variance = (Actual quantity * Actual price) - (Actual quantity * Standard price)

= $386,210 - (50,200 * $8.10)

= $386,210 - $406,620

= $20,410 Favorable

Materials quantity variance = (Actual quantity * Standard price) - (Standard quantity * Standard price)

= (76,030 * $8.10) - [(7,600 * 10) * $8.10]

= $615,843 - $615,600

= $243 Unfavorable

Labor rate variance = (Actual hours * Actual rate) - (Actual hours * Standard rate)

= $88,880 - (3,450 * $24.7)

= $88,880 - $85,215

= $3,665 Unfavorable

Labor efficiency variance = (Actual hours * Standard rate) - (Standard hours * Standard rate)

= (3,450 * $24.7) - [(7,600 * 0.5) * $24.7]

= $85,215 - $93,860

= $8,645 Favorable

Variable overhead rate variance = (Actual hours * Actual rate) - (Actual hours * Standard rate)

= $21,295 - (3,450 * $6.4)

= $21,295 - $22,080

= $785 Favorable

Variable overhead efficiency variance = (Actual hours * Standard rate) - (Standard hours * Standard rate)

= (3,450 * $6.4) - [(7,600 * 0.5) * $6.4]

= $22,080 - $24,320

= $2,240 Favorable