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	2.20	pounds	$	16.10	per pound	$	35.42
Direct labor	1.00	hours	$	15.10	per hour	$	15.10
Variable manufacturing overhead	1.00	hours	$	9.20	per hour	$	9.20
Total standard cost per unit						$	59.72

	Total		Variances Reported
	Standard Cost*		Price or Rate			Quantity or Efficiency
Direct materials	$	566,720	$	10,788	F	$	32,200	U
Direct labor	$	241,600	$	3,400	U	$	15,100	U
Variable manufacturing overhead	$	147,200	$	5,000	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

(1) Units Produced last year :-

Direct Material Total Standard cost / Std cost per unit

   = 566720/35.42 = 16000 units

(2) Pounds of DM Purchased & Produced :-

DM Quantity Variance = (SQ – AQ) * SR

32200 (U) = ([2.20 * 16000] – AQ) * 16.10

-32200 = 566720 – 16.10AQ

AQ = 37200 pound

(3) Actual cost per pound of material:-

DM Price Variance = (SR – AR) * AQ

10788 (F) = (16.10 – AR) * 37200

10788 = 598920 – 37200 AR

AR = $15.81

(4) Actual direct labor-hours were worked during the period :-

DL Efficiency Variance = (S Hrs – A Hrs) * SR

15100 (U) = (16000 – A Hrs) * 15.10

-15100 = 241600 – 15.10 A hrs

A Hrs = 17000 Hrs

(5) Actual rate paid per direct labor-hour:-

DL Rate Variance = (SR – AR) * A Hrs

3400 (U) = (15.10 – AR) * 17000

-3400 = 256700 – 17000 AR

AR = $15.30

(6) Actual variable manufacturing overhead cost :-

Variable Mfr O/H Efficiency Variance = (S Hrs – A Hrs) * SR

(16000 – 17000) * 9.20 = 9200 (U)

Actual variable manufacturing overhead cost = Std Cost + Price Variance + Efficiency variance

    = 147200 + 5000 (F) + 9200 (U)

= 147200 + 5000 – 9200 = $143000