Question

	Standard Quantity		Standard Price (Rate)			Standard Unit Cost
Direct materials (cork board)	3.50	sq. ft.	$	2.00	per sq. ft.	$	7.00
Direct labor	1	hrs.	$	13.00	per hr.		13.00
Variable manufacturing overhead (based on direct labor hours)	1	hrs.	$	0.60	per hr.		0.60
Fixed manufacturing overhead ($67,500 ÷ 150,000 units)							0.45

Bullseye has the following actual results for the month of September:

Number of units produced and sold		130,000
Number of square feet of corkboard used		470,000
Cost of corkboard used	$	893,000
Number of labor hours worked		138,000
Direct labor cost	$	1,669,800
Variable overhead cost	$	79,000
Fixed overhead cost	$	61,000

Required:
1. Calculate the direct materials price, quantity, and total spending variances for Bullseye.
2. Calculate the direct labor rate, efficiency, and total spending variances for Bullseye.
3. Calculate the variable overhead rate, efficiency, and total spending variances for Bullseye.

Answer 1

AQ= Actual quantity

SQ= standard quantity

AP= actual price

SP=standard price

1)

1.Direct material Price Variance = AQ (AP-SP)

=$893,000- (470,000*$2)

=$893,000-940,000

=$47,000 favorable (as the actual cost< standard cost, the variance is favorable)

2. Direct usage variance = SP(AQ-SQ)

$2 (470,000 -(130,000*3.5 sq ft per unit)

=$2 (470,000-455,000)

=$30,000 unfavorable (as the actual cost> standard cost the variance is unfavorable)

3.Total spending variance = AQ*AP-SQ*SP

=($893,000)-(130,000*3.5)*$2

=893,000-$910,000

=$17,000 favorable

2)

1.Direct labor rate variance = AH(AR-SR)

=$1,669,800-138,000*$13

=$1,669,800-1,794,000

=$124,200 favorable (as the actual cost< standard cost, the variance is favorable)

2, Direct labor effeciency variance = SR(AH-SH)

$13(138,000-(130,000*1))

=$104,000 unfavorable (as the actual cost> standard cost, the variance is unfavorable)

3. labor spending variance = SR*SH-AR*AH

=$13*130,000-$1,669,800

=$20,200 favorable

3)

1.variable OH rate variance = AH (AR-SR)

$79,000-138,000*0.60

=$3,800 favorable (As the actual cost< standard cost the variance is favorable)

2. Variable effeciency variance=SR(AH-SH)

$0.60 (138,000-130,000)

=$4,800 unfavorable (as the actual hour> standard hours allowed the variance is unfavorable)

3. spending variance = SR*SH-AR*AH

$0.60*130,000-$79,000

=$78,000-79,000

=$1,000 uinfavorable

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