Question

In: Accounting

Answer must be typed in word or in excel Original Budget Actual Units produced 1,000 units...

Answer must be typed in word or in excel

Original Budget

Actual

Units produced

1,000 units

970 units

Materials (kg)

400 kg

409 kg

Material Costs

$8,000

See other info

Direct Labour (Hours)             

36,000 hours

34,010 hours

Direct Labour Costs

$385,000

$365,750

Variable Overhead Costs

$255,000

$245,000

Fixed Overhead Costs   

$160,000

$165,000

Other Information

Overhead is Allocated on Direct Labour Hours

During the year, 500 kg of materials were purchased for $9,000

Beginning Inventory: none

Ending Inventory:     91kg

Required:

Calculate the following variances:

  1. Material Rate
  2. Material Efficiency
  3. Labour Price
  4. Labour Efficiency
  5. Variable Overhaed Rate
  6. Variable Overhead Efficiency
  7. Fixed Overhead Rate
  8. Fixed Overhead Production Volume

Solutions

Expert Solution

Variances
MPV = ( SP - AP ) * AQ purchased
MPV = ( 8000 / 400 ) - ( 9000 / 500 ) * 500 = $ 1000 ( favourable )
MQV = ( SQ - AQ ) SP
MQV = ( 400 / 1000 ) * 970 ) - 409 ) * 20 = $ 420 ( unfavourable )
LRV = ( SR - AR ) AH
LRV = ( 385000 / 36000 ) - ( 365750 / 34010 ) * 34010 =
( 10.69444 - 10.75419 ) * 34010= $ 2032 ( Unfav. )
LEV = (Sh - AH ) SR
LEV = ( 36000 / 1000 ) * 970 ) - 34010 ) * 10.69444 = $ 9732 ( favourable)
VOHRV = ( SR - AR ) AH
VOHRV = ( 255000 / 36000 ) - ( 245000 / 34010 ) * 34010 =
( 7.08333 - 7.20376 ) * 34010= $ 4096 ( Unfav. )
VOHEV = ( SH - AH ) SR
VOHEV = ( 36000 / 1000 ) * 970 ) - 34010 ) * 7.08333 = $ 6446 ( favourable)
FOH rate variance = ( SR - AR ) * AH
[( 160000 / 36000 ) - ( 165000 / 34010 ) ] * 34010
( 4.4444 - 4.8515 ) * 34010 = $ 13846 ( unfav. )
FOH Volume Variance = ( Standard units - Budgeted units ) * SR
( 36000 - 34010 ) * 4.4444 = $ 8844 ( unfav. )

ekkarill92 answered 1 year ago
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