Question

Vitex, Inc. manufactures a popular consumer product and it has provided the following data excerpts from its standard cost system:

Inputs	(1) Standard Quantity or Hours		(2) Standard Price or Rate			Standard Cost (1) × (2)
Direct materials	2.00	pounds	$	16.70	per pound	$	33.40
Direct labor	1.00	hours	$	15.50	per hour	$	15.50
Variable manufacturing overhead	1.00	hours	$	9.30	per hour	$	9.30
Total standard cost per unit						$	58.20

	Total		Variances Reported
	Standard Cost*		Price or Rate			Quantity or Efficiency
Direct materials	$	601,200	$	11,020	F	$	33,400	U
Direct labor	$	279,000	$	3,800	U	$	15,500	U
Variable manufacturing overhead	$	167,400	$	4,900	F	$	?†	U

*Applied to Work in Process during the period.

The company's manufacturing overhead cost is applied to production on the basis of direct labor-hours. All of the materials purchased during the period were used in production. Work in process inventories are insignificant and can be ignored.

Required:

1. How many units were produced last period?

2. How many pounds of direct material were purchased and used in production?

3. What was the actual cost per pound of material? (Round your answer to 2 decimal places.)

4. How many actual direct labor-hours were worked during the period?

5. What was the actual rate paid per direct labor-hour? (Round your answer to 2 decimal places.)

6. How much actual variable manufacturing overhead cost was incurred during the period?

Answer 1

Solution:

1.) The number of units produced last period:

Number of units produced = Total Standard Cost/ Standard Cost per unit

= $601,200 + $279,000+ $167,400 / $58.20

=$1,047,600 / $58.20

= 18,000 units

2.) The pounds of direct materials purchased and used in production:

Materials quantity variance = (Standard quantity - Actual quantity) × Standard price

-$33,400 = [(18,000 units × 2.00 pound per unit) - Actual quantity] × $16.70 per pound

-$33400 / $16.70 =[36,000 pounds - Actual quantity]

-2,000 pounds =[36000 pounds - Actual quantity]

Actual quantity =36000 pounds + 2000 pounds

= 38,000 pounds

3.) The actual cost per pound of material:

Materials price variance = (Standard price - Actual price) × Actual quantity

$11,020 = ($16.70 per pound - Actual price) × 38,000 pounds

=$11020 / 38,000 pounds = ($16.70 per pound - Actual price)

=$0.29 =($16.70 per pound - Actual price)

Actual price =$16.70 - $0.29

=$16.41

4.) The actual direct labor hour worked during the period:

Direct labor efficiency variance = (Standard hour - Actual hour) × Standard rate

-$15,500 = (18,000 hours - Actual hour) ×$15.50 per hour

-$15,500/$15.50 =(18,000 hours - Actual hours)

-1,000 hours =(18,000 hours - Actual hours)

Actual hours =18,000 hours + 1,000 hours

=19,000 hours

* Standard hours = $279,000/$15.50 = 18,000 hours

5.) Actual rate paid for direct labor hour:

Direct labor rate variance = (Standard Rate - Actual Rate) × Actual hours

-$3,800 = ($15.50 - Actual rate) ×19,000 hours

-$3,800 / 19,000 hours = ($15.50 - Actual rate)

= $-0.20 =($15.50 - Actual rate)

Actual rate = $15.50 + 0.20

Actual rate = $15.70

6.) The actual variable manufacturing overhead incurred:

Variable manufacturing overhead rate variance = (Standard Rate × Actual hour) - (Actual rate × Actual hour)

$4,900 =($9.30 per hour ×19,000 hours) - (Actual variable manufacturing overhead)

$4,900 = ($176,700) - (Actual variable manufacturing overhead)

Actual variable manufacturing overhead = $176,700 - $4,900

Actual variable manufacturing overhead = $171,800

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