Question

1. Acme Company’s production budget for August is 17,600 units and includes the following component unit costs: direct materials, $7.70; direct labor, $10.10; variable overhead, $6.20. Budgeted fixed overhead is $33,000. Actual production in August was 18,810 units. Actual unit component costs incurred during August include direct materials, $8.50; direct labor, $9.10; variable overhead, $6.90. Actual fixed overhead was $34,600. The standard direct material cost per unit consists of 11 pounds of raw material at $0.7 per pound. During August, 319,770 pounds of raw material were used that were purchased at $0.50 per pound.

Required: Calculate the materials price variance and materials usage variance for August. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

Material price variance
Material usage variance

2. Acme Company’s production budget for August is 18,100 units and includes the following component unit costs: direct materials, $8.00; direct labor, $10.50; variable overhead, $6.50. Budgeted fixed overhead is $38,000. Actual production in August was 19,872 units. Actual unit component costs incurred during August include direct materials, $9.00; direct labor, $10.00; variable overhead, $7.50. Actual fixed overhead was $40,100. The standard direct labor cost per unit consists of 0.5 hour of labor time at $21 per hour. During August, $198,720 of actual labor cost was incurred for 8,640 direct labor hours.

Required:
Calculate the labor rate variance and labor efficiency variance for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

Labor rate variance
Labor efficiency variance

3. Acme Company’s production budget for August is 18,900 units and includes the following component unit costs: direct materials, $7.2; direct labor, $11.4; variable overhead, $5.4. Budgeted fixed overhead is $46,000. Actual production in August was 21,840 units. Actual unit component costs incurred during August include direct materials, $9.60; direct labor, $10.80; variable overhead, $6.20. Actual fixed overhead was $48,900. The standard variable overhead rate per unit consists of $5.4 per machine hour and each unit is allowed a standard of 1 hour of machine time. During August, $135,408 of actual variable overhead cost was incurred for 24,180 machine hours.

Required:
Calculate the variable overhead spending variance and the variable overhead efficiency variance. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

Variable overhead spending variance
Variable overhead efficiency variance

4. Acme Company’s production budget for August is 23,000 units and includes the following component unit costs: direct materials, $9.0; direct labor, $11.0; variable overhead, $5.8. Budgeted fixed overhead is $49,000. Actual production in August was 24,075 units. Actual unit component costs incurred during August include direct materials, $10.00; direct labor, $10.00; variable overhead, $6.80. Actual fixed overhead was $52,200. The standard fixed overhead application rate per unit consists of $2.4 per machine hour and each unit is allowed a standard of 1 hour of machine time.

Required:
Calculate the fixed overhead budget variance and the fixed overhead volume variance. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

Fixed overhead budget variance
Fixed overhead volume variance

Answer 1

Answer with working given below: