Question

In: Accounting

Hawley Inc. manufactures designer iPod cases for national distribution. The standard costs for the manufacture of...

Hawley Inc. manufactures designer iPod cases for national distribution. The standard costs for the manufacture of designer iPod cases were as follows:

    Standard Costs Actual Costs

Direct materials 1,500 lbs. at $35 1,600 lbs. at $32

Direct labor 4,800 hrs. at $11 4,500 hrs. at $11.80

Factory overhead Rates per labor hour, based on 100% of the normal capacity of 5,500 labor hrs.:

Variable cost, $2.40 $12,300 variable cost

Fixed cost, $3.50 $19,250 fixed cost

Instructions

1. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance for the designer iPod cases.

2. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance for the designer iPod cases.

3. Determine the variable factory overhead controllable variance, fixed factory overhead volume

variance, and total factory overhead cost variance for the designer iPod cases.

Solutions

Expert Solution

ANSWER

Standard Quantity (SQ) Standard Price (SP) Standard Unit Cost
Direct Material 1500 35 52500
Direct Labor 4800 11 52500
Actual Quantity Actual Rate (AP) Given Actual Cost
Direct Material 1600 1600 32 51200
Direct Labor 4500 4500 11.8 53100
Direct Material Price Variance (SP-AP)*AQ (35-32)*1600 4800 Favorable
Direct Material Quantity Variance (SQ-AQ)*SP (1500-1600)*35 -3500 Unfavorable
Total Material Variance Price Var+Quantity Var 1300 Favorable
Direct Labor Rate Variance (SP-AP)*AQ (11-11.8)*4500 -3600 Unfavorable
Direct Labor Efficiency Variance (SQ-AQ)*SP (4800-4500)*11 3300 Favorable
Total Labor Variance Price Var+Quantity Var -300 Unfavorable
Controllable Variable Ovrhead Variance: 11520-12300= 780 U
Fixed Overhead Volume Variance: (5500-4800)*3.5=2450 U
Total Overhead Variance: 780+2450=3230 U

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