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	2.50	pounds	$	16.50	per pound	$	41.25
Direct labor	1.00	hours	$	15.80	per hour	$	15.80
Variable manufacturing overhead	1.00	hours	$	9.20	per hour	$	9.20
Total standard cost per unit						$	66.25

	Total		Variances Reported
	Standard Cost*		Price or Rate			Quantity or Efficiency
Direct materials	$	742,500	$	13,630	F	$	33,000	U
Direct labor	$	284,400	$	3,800	U	$	15,800	U
Variable manufacturing overhead	$	165,600	$	4,100	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:

Nos of units produced = Standard cost of material / Standard cost per unit of material = $742,500 / $41.25 = 18000 units

Solution 2:

Standard quantity of material for actual production = 18000 * 2.50 = 45000 pounds

Direct material quantity variance = $33,000 U

(SQ - AQ) * SP = -$33,000

(45000 - AQ) * $16.50 = -$33,000

Actual quantity of material purchased and used = 47000 pound

Solution 3:

Direct material price variance = $13,630 F

(SP - AP) * AQ = $13,630

($16.50 - AP) * 47000 = $13,630

Actual price = $16.21 per pound

Solution 4:

Standard direct labor hours = 18000 * 1 = 18000 hours

direct labor efficiency variance = (SH - AH) * SR = $15,800 U

(18000 - AH)* $15.80 = -$15,800

Actual hours = 19000 hours

Solution 5:

Direct labor rate variance = $3,800 U

(SR - AR) * AH = -$3,800

($15.80 - AR) * 19000 = -3,800

Actual rate of labor = $16.90 per hour

Solution 6:

Variable manufacturing overhead efficiency variance = (SH - AH) * SR = (18000 - 19000) * $9,20 = $9,200 U

Actual variable manufacturing overhead = Standard variable overhead - Favorable variable overhead rate variance + Unfavorable variable overhead efficiency variance

= $165,600 - $4,100 + $9,200 = $170,700