Question

Lamont Wood Products produced 3,200 bookshelves in May. The standards and actual cost data is shown below.

	Standard Cost	Actual Cost
Direct Materials
Standard: 1.4 feet at $3.00 per foot	$4.20
Actual: 1.35 feet at $3.20 per foot		$4.32
Direct Labor
Standard: .75 hours at $15.00 per hour	$11.25
Actual: .7 hours at $14.40 per hour		$10.08
Variable Manufacturing Overhead
Standard: .75 hours * $4.00 per hour	$3.00
Actual: .7 hours * $3.60 per hour		$ 2.52
Total cost per unit:	$18.45	$16.92

1. Compute the materials price and quantity variances
2. Compute the direct labor rate and efficiency variances
3. Compute the variable overhead rate and efficiency variances

Copy and paste the table below to use to enter your answers into.

Materials Price Variance
Actual Quantity	Actual Price	Standard Price	Difference	Price Variance	Favor/Unfavorable
Materials Quantity Variance
Standard Price	Actual Quantity	Standard Quantity	Difference	Quantity Variance	Favor/Unfavorable
Labor Rate Variance
Actual Hours	Actual Rate	Standard Rate	Difference	Price Variance	Favor/Unfavorable
Labor Efficiency Variance
Standard Rate	Actual Hours	Standard Hours	Difference	Quantity Variance	Favor/Unfavorable
Variable Overhead Rate Variance
Actual Hours	Actual Rate	Standard Rate	Difference	Rate Variance	Favor/Unfavorable
Variable Overhead Efficiency Variance
Standard Rate	Actual Hours	Standard Hours	Difference	Quantity Variance	Favor/Unfavorable

Answer 1

(A)

Material price variance = actual quantity purchased x (standard price - actual price)
= 4320 x ($3 - $3.20)
= $864 Unfavorable
Where,
Actual quantity purchased = 3200 x 1.35 = 4320 feet

(B)
Material quantity variance = standard price x (standard quantity - actual quantity used)
= $3 x (4480 - 4320)
= $480 Favorable
Where,
Standard quantity = actual output x standard quantity per unit of output
= 3200 x 1.4 = 4480 feet

(C)
Labor rate variance = actual hours x (standard rate - actual rate)
= 2240 x ($15 - $14.40)
= $1344 Favorable
Where,
Actual hours = 3200 x 0.70 = 2240 hours

(D)
Labor efficiency variance = standard rate x (standard hours - actual hours)
= $15 x (2400 - 2240)
= $2400 Favorable
Where,
Standard hours = actual output x standard hours per unit of output
= 3200 x 0.75 = 2400 hours

(E)
Variable overhead rate/spending variance = actual hours x (standard rate - actual rate)
= 2240 x ($4 - $3.60)
= $896 Favorable
Where,
Actual hours = 3200 x 0.70 = 2240 hours

(F)
Variable overhead efficiency variance = standard rate x (standard hours - actual hours)
= $4 x (2400 - 2240)
= $640 Favorable
Where,
Standard hours = actual output x standard hours per unit of output
= 3200 x 0.75 = 2400 hours