Question

Majer Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 6.3 ounces $ 4.00 per ounce $ 25.20 Direct labor 0.3 hours $ 19.00 per hour $ 5.70 Variable overhead 0.3 hours $ 4.00 per hour $ 1.20 The company reported the following results concerning this product in February. Originally budgeted output 5,800 units Actual output 8,600 units Raw materials used in production 30,900 ounces Actual direct labor-hours 1,990 hours Purchases of raw materials 33,300 ounces Actual price of raw materials $ 102.90 per ounce Actual direct labor rate $ 112.40 per hour Actual variable overhead rate $ 4.90 per hour 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 efficiency variance for February is:

Answer 1

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Standard Material Price		$               4.00
Standard Quantity	8.600*6.3	52290
Actual Quantity		33300
Actual Quantity used		30900
Actual Matrial Price		$           102.90
Material Price Variance	AQ(AP-SP)
	(Actual Price	-	Standard Price)	*	Actual Quantity
	$                               102.90	-	$              4.00	*	33300
	$                          3,293,370	Unfavorable
Material Quantity Variance	SP(AQ-SQ)
	(Actual Quantity	-	Standard Qty)	*	Standard Price
	30900	-	52290	*	$               4.00
	$                          85,560.00	Favorable
Standard Hour Rate		$             19.00
Standard Hour	8.600*0.3	2580
Actual Hours		1990
Actual Hour Rate		$           112.40
Labor Rate Variance	AH(AR-SR)
	(Actual Rate	-	Standard Rate)	*	Actual Hours
	$                               112.40	-	$            19.00	*	1990
	$                             185,866	Unfavorable
Labor Efficiency Variance	SR(AH-SH)
	(Actual Quantity	-	Standard Qty)	*	Standard Price
	1990	-	2580	*	$             19.00
	$                               11,210	Favorable
Standard Hour Rate		$               4.00
Standard Hour	8.600*0.3	2580
Actual Hours		1990
Actual Hour Rate		$               4.90
Variable Overhead Rate Variance	AH(AR-SR)
	(Actual Rate	-	Standard Rate)	*	Actual Hours
	$                                   4.90	-	$              4.00	*	1990
	$                                 1,791	Unfavorable
Variable Overhead Eff Variance	SR(AH-SH)
	(Actual Quantity	-	Standard Qty)	*	Standard Price
	1990	-	2580	*	$               4.00
	$                                 2,360	Favorable