Question

Bullseye Company manufactures dartboards. Its standard cost information follows:

	Standard Quantity		Standard Price (Rate)			Standard Unit Cost
Direct materials (cork board)	3.50	sq. ft.	$	2.50	per sq. ft.	$	8.75
Direct labor	1	hrs.	$	11.00	per hr.		11.00
Variable manufacturing overhead (based on direct labor hours)	1	hrs.	$	0.55	per hr.		0.55
Fixed manufacturing overhead ($51,000 ÷ 170,000 units)							0.30

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

Number of units produced and sold		150,000
Number of square feet of corkboard used		520,000
Cost of corkboard used	$	1,248,000
Number of labor hours worked		159,000
Direct labor cost	$	1,605,900
Variable overhead cost	$	92,000
Fixed overhead cost	$	66,000

Required:
1. Calculate the direct materials price, quantity, and total spending variances for Bullseye. (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.)



2. Calculate the direct labor rate, efficiency, and total spending variances for Bullseye.(Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.)



3. Calculate the variable overhead rate, efficiency, and total spending variances for Bullseye. (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable/Overapplied and "U" for unfavorable/underapplied.)

Answer 1

Summery

Material Price Variance	$      52,000.00	F
Material quantity variance	$      12,500.00	F
Total Material Variance	$      64,500.00	F
Labor rate variance	$    143,100.00	F
Labor Efficiency variance	$      99,000.00	U
Total Labor variance	$      44,100.00	U
Variable Overhead Rate Variance	$        4,550.00	U
Variable Overhead Efficiency Variance	$        4,950.00	U
Variable Overhead Spending Variance	$        9,500.00	U

Working

Standard DATA for		150000	Units
	Quantity (SQ)	Rate (SR)	Standard Cost
	[A]	[B]	[A x B]
Direct Material	( 3.5 Cork board x 150000 Units)=525000 Cork board	$        2.50	$          1,312,500.00
Direct labor	( 1 Hours x 150000 Units)=150000 Hours	$      11.00	$          1,650,000.00
Variable Overhead	( 1 Direct labor hours x 150000 Units)=150000 Direct labor hours	$        0.55	$                82,500.00

Actual DATA for		150000	Units
	Quantity (AQ)	Rate (AR)	Actual Cost
Direct Material	520000	$                  2.40	$       1,248,000.00
Direct labor	159000	$                10.10	$       1,605,900.00
Variable Overhead	159000	$                  0.58	$             92,000.00

Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$                        2.50	-	$                       2.40	)	x	520000
	52000
	Variance		$            52,000.00			Favourable-F

Material Quantity Variance
(	Standard Quantity	-	Actual Quantity	)	x	Standard Rate
(	525000	-	520000	)	x	$       2.50
	12500
	Variance		$            12,500.00			Favourable-F

Material Spending Variance
(	Standard Cost	-	Actual Cost	)
(	$       1,248,000.00	-	$      1,312,500.00	)
	-64500
	Variance		$            64,500.00			Unfavourable-U

Labor Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                     11.00	-	$                    10.10	)	x	159000
	143100
	Variance		$          143,100.00			Favourable-F

Labour Efficiency Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	150000	-	159000	)	x	$    11.00
	-99000
	Variance		$            99,000.00			Unfavourable-U

Labor Spending Variance
(	Standard Cost	-	Actual Cost	)
(	$       1,650,000.00	-	$      1,605,900.00	)
	44100
	Variance		$            44,100.00			Favourable-F

Variable Overhead Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                        0.55	-	$                       0.58	)	x	159000
	$             (4,550.00)
	Variance		$              4,550.00			Unfavourable-U

Variable Overhead Efficiency Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	150000	-	159000	)	x	$       0.55
	$             (4,950.00)
	Variance		$              4,950.00			Unfavourable-U

Variable Overhead Spending Variance
(	Standard Cost	-	Actual Cost	)
(	$             82,500.00	-	$            92,000.00	)
	-9500
	Variance		$              9,500.00			Unfavourable-U