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In: Accounting

A manufactured product has the following information for June.

A manufactured product has the following information for June.


StandardActual
Direct materials(6 lbs. @ $8 per lb.)
48,500lbs. @ $8.10 per lb.
Direct labor(2 hrs. @ $16 per hr.)
15,700hrs. @ $16.50 per hr.
Overhead(2 hrs. @ $12 per hr.)$198,000
Units manufactured

8,000

1. Compute the standard cost per unit.

2. Compute the total cost variance for June. Indicate whether the cost variance is favorable or unfavorable.





Solutions

Expert Solution

Data for calculation of Variance
Standard Standard Cost for 8000 Units Actual for 8000 Units
Units Rate Total Units Rate Total Units Rate Total
Material 6           8.00         48.00      48,000.00                 8.00    384,000.00    48,500.00                 8.10    392,850.00
Labour 2         16.00         32.00      16,000.00               16.00    256,000.00    15,700.00               16.50    259,050.00
Ovehead 2         12.00         24.00      16,000.00               12.00    192,000.00    15,700.00               12.61    198,000.00

1.

Standard Cost for 8000 Units
Units Rate Total
     48,000.00                 8.00    384,000.00
     16,000.00               16.00    256,000.00
     16,000.00               12.00    192,000.00

2.

Material price Variance= (SP-AP)*AQ (8-8.10)*48500           (4,850) Unfavourable
Material Quantity Variance= (SQ-AQ)*Sp (48000-48500)*8           (4,000) Unfavourable
Labour Rate Variance (SR-AR)*AH (16-16.50)*15700           (7,850) Unfavourable
Labour Quantity Variance (SH-AH)*SR (16000-15700)*16              4,800 Favourable
Variable Overhead Rate Variance (SR-AR)*AH (12-12.61)*15700           (9,577) Unfavourable
Variable Overhead Quantity Variance (SH-AH)*SR (16000-15700)*12              3,600 Favourable


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