Question

In: Accounting

The following is information related to X Company, a company that uses a standard cost system:...

The following is information related to X Company, a company that uses a standard cost system:

Standard cost card for 1 unit of Product A:

Direct materials – Raw Material A   (1 kilogram @ $ 20/kg.)           $ 20

Direct materials – Raw Material B   (1 kilogram @$ 10/kg.)         $ 10

Direct labour       (1 hour @ $15/hr.)                                 $ 15

Variable overhead       (1 hour @ $ 5/hr.)                                  $   5

Fixed overhead    (1 hour @ $ 10/hr.)                                       $ 10

Total budgeted fixed overhead:                                            $ 1,000

Budget total units of production:                                         100 units

Actual units produced                                                       88 units

Actual costs incurred:                                                    Total    

Direct materials – Raw Material A   (130 kilograms                             $ 2,860

Direct materials – Raw Material B   ( 60 kilograms)                 $    660

Direct labour       (100 hours)                                         $ 1,600

Variable overhead       (100 hours)                                                 $    480

Fixed overhead                                                                       $ 1,120

Required:

Calculate the direct labour variances.

Calculate the two variable overhead variances.

Calculate the direct material variances.

Pls write clearly

Solutions

Expert Solution

  • All working forms part of the answer
  • Requirement 1: Direct Labor Variances

--Working

Actual DATA for

88

units

Quantity (AQ)

Rate (AR)

Actual Cost

Direct labor

100

$              16.00

$             1,600.00

Standard DATA for

88

units

Quantity (SQ)

Rate (SR)

Standard Cost

[A]

[B]

[A x B]

Direct labor

( 1 hours x 88 units)=88 hours

$                15.00

$         1,320.00

---Answer

Labor Rate Variance

(

Standard Rate

-

Actual Rate

)

x

Actual Labor Hours

(

$                     15.00

-

$                    16.00

)

x

100

-100

Variance

$                  100.00

Unfavourable-U

Labour Efficiency Variance

(

Standard Hours

-

Actual Hours

)

x

Standard Rate

(

88

-

100

)

x

$                        15.00

-180

Variance

$                  180.00

Unfavourable-U

Labor Spending Variance

(

Standard Cost

-

Actual Cost

)

(

$               1,320.00

-

$              1,600.00

)

-280

Variance

$                  280.00

Unfavourable-U

  • Requirement 2: Variable Overhead Variances

---Working

Actual DATA for

88

units

Quantity (AQ)

Rate (AR)

Actual Cost

Variable Overhead

100

$                4.80

$                 480.00

Standard DATA for

88

units

Quantity (SQ)

Rate (SR)

Standard Cost

[A]

[B]

[A x B]

Variable Overhead

( 1 hours x 88 units)=88 hours

$                   5.00

$             440.00

---Answer

Variable Overhead Rate Variance

(

Standard Rate

-

Actual Rate

)

x

Actual Labor Hours

(

$                        5.00

-

$                       4.80

)

x

100

20

Variance

$                    20.00

Favourable-F

Variable Overhead Efficiency Variance

(

Standard Hours

-

Actual Hours

)

x

Standard Rate

(

88

-

100

)

x

$                           5.00

-60

Variance

$                    60.00

Unfavourable-U

  • Requirement 3: Direct material Variances

Part 1: Variances for raw Material A

Actual DATA for

88

units

Quantity (AQ)

Rate (AR)

Actual Cost

Direct Material

130

$            22.000

$             2,860.00

Standard DATA for

88

units

Quantity (SQ)

Rate (SR)

Standard Cost

[A]

[B]

[A x B]

Direct Material

( 1 kg x 88 units)=88 kg

$                20.00

$         1,760.00

Answer [3 Variances]

Material Price Variance

(

Standard Rate

-

Actual Rate

)

x

Actual Quantity

(

$                     20.00

-

$                    22.00

)

x

130

-260

Variance

$                  260.00

Unfavourable-U

Material Quantity Variance

(

Standard Quantity

-

Actual Quantity

)

x

Standard Rate

(

88

-

130

)

x

$                        20.00

-840

Variance

$                  840.00

Unfavourable-U

Material Spending Variance

(

Standard Cost

-

Actual Cost

)

(

$               1,760.00

-

$              2,860.00

)

-1100

Variance

$              1,100.00

Unfavourable-U

Part 2: Variances for Raw Material B

Actual DATA for

88

units

Quantity (AQ)

Rate (AR)

Actual Cost

Direct Material

60

$            11.000

$                 660.00

Standard DATA for

88

units

Quantity (SQ)

Rate (SR)

Standard Cost

[A]

[B]

[A x B]

Direct Material

( 1 kg x 88 units)=88 kg

$                10.00

$             880.00

Answers: [3 Variances]

Material Price Variance

(

Standard Rate

-

Actual Rate

)

x

Actual Quantity

(

$                     10.00

-

$                    11.00

)

x

60

-60

Variance

$                    60.00

Unfavourable-U

Material Quantity Variance

(

Standard Quantity

-

Actual Quantity

)

x

Standard Rate

(

88

-

60

)

x

$                        10.00

280

Variance

$                  280.00

Favourable-F

Material Spending Variance

(

Standard Cost

-

Actual Cost

)

(

$                   880.00

-

$                  660.00

)

220

Variance

$                  220.00

Favourable-F

ekkarill92 answered 3 years ago
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