Question

A.(i) Moment Inc. provides the following data for June 2016 when 15,000 Units are manufactured: Standard Material Cost (Per Unit) 8.50 kg @ $ 7.50/kg Actual Material Cost (Per Unit) 6.75 kg @ $ 13.5/kg Standard Labor cost (Per Unit) 5.5 hrs @ $ 15/hr Actual Labor cost (Per Unit) 6.5 hrs @ $ 12.2/hr Calculate: Direct Material Price Variance Direct Material Quantity/Usage Variance Total Material Cost Variance Direct Labor Rate Variance Direct Labor Efficiency Variance Total Labor Cost Variance (ii) Calculate Variable Overhead Spending Variance if actual labor hours used are 260,standard variable overhead rate is $10.40 per direct labor hour and actual variable overhead rate is $9.30 per direct labor hour. Also specify whether the variance is favorable or unfavorable.   (iii) Calculate the variable overhead efficiency variance using the following figures: Number of Units Produced 620 Standard Direct Labor Hours Per Unit 0.2 Actual Direct Labor Hours Used 260 Standard Variable Overhead Rate $10.40

B. “Managers of most organizations continually plan for the future, and after the plan is implemented, managers assess whether they achieved their goals. What are the two functions that enable management to go through the process of continually planning and evaluating?

Answer 1

(i)	a. Direct Material Variance
	Direct Material Price Variance
	Actual Quantity at actual cost
	101250 Kg x $13.50 per Kg	$1,366,875
	Actual Quantity at standard cost
	101250 Kg x $7.50 per Kg	$759,375
	Price Variance	$607,500	Unfavourable
	Direct Material Quantity Variance
	Actual Quantity at standard cost
	101250 Kg x $7.50 per Kg	$759,375
	Standard Quantity at standard cost
	127500 Kg x $7.50 per Kg	$956,250
	Quantity Variance	($196,875)	Favourable
	Direct Material Total Variance
	Price Variance	$607,500
	Quantity Variance	($196,875)
	Total Variance	$410,625	Unfavourable
	b. Direct Labour Variance
	Direct Labour Rate Variance
	Actual hour at actual rate
	97500 hrs x $12.20 per hr	$1,189,500
	Actual hours at standard rate
	97500 hrs x $15 per hr	$1,462,500
	.
	Rate Variance	($273,000)	Favourable
	Direct Labour Efficiency Variance
	Actual hour at standard rate
	97500 hrs x $15 per hr	$1,462,500
	Standard hour at standard rate
	82500 hrs x $15 per hr	$1,237,500
	Efficiency Variance	$225,000	Unfavourable
	Direct Labour Total Variance
	Rate Variance	($273,000)
	Efficiency Variance	$225,000
	Total Variance	($48,000)	Favourable
(ii)	Variable overhead spending variance
	Actual hour at actual rate
	260 hrs x $9.30 per hr	$2,418
	Actual hours at standard rate
	260 hrs x $10.40 per hr	$2,704
	.
	Spending Variance	($286)	Favourable
(iii)	Variable overhead Efficiency Variance
	Actual hour at standard rate
	260 hrs x $10.40 per hr	$2,704
	Standard hour at standard rate
	124 hrs x $10.40 per hr	$1,290
	Efficiency Variance	$1,414	Unfavourable