Question

In: Accounting

Kropf Inc. has provided the following data concerning one of the products in its standard cost...

Kropf Inc. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours.

Inputs Standard Quantity or Hours per Unit of Output Standard Price or Rate
Direct materials

7.90

liters $ 7.50 per liter
Direct labor 0.50 hours $ 26.70 per hour
Variable manufacturing overhead 0.50 hours $ 6.40 per hour

The company has reported the following actual results for the product for September:

Actual output 10,100 units
Raw materials purchased 80,500 liters
Actual cost of raw materials purchased $ 615,500
Raw materials used in production 79,800 liters
Actual direct labor-hours 4,770 hours
Actual direct labor cost $ 130,302
Actual variable overhead cost $ 23,814

Required:

a. Compute the materials price variance for September.

b. Compute the materials quantity variance for September.

c. Compute the labor rate variance for September.

d. Compute the labor efficiency variance for September.

e. Compute the variable overhead rate variance for September.

f. Compute the variable overhead efficiency variance for September.

(Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Solutions

Expert Solution

material price variance = (standard price-actual price)*actual quantity
actual price = 615500/80500 = 7.6
mateial price variance = (7.50-7.60)*80500= 8050 U
material quantity variance = (standard quantity-actual quantity)*standard price
quantity variance = (10100*7.90-79800)*7.50
quantity variance = 75 U
labor rate variance = (standard rate-actual rate)*actual hours
rate variance = (26.70-130302/4770)*4770
rate variance = 2943 U
labor efficiency variance = (standard hour-actual hour)*standard rate
efficiency variance = (0.50*10100-4770)*26.70
efficiency variance = 7476 F
Variable overhead rate variance = (standard overhead rate-actual overhead rate)*actual hour
overhead rate variance = (6.40-23814/4770)*4770
overhead rate variance = 6714 F
varaible overhead efficiency variance = (standard hour-actual hour)*standard rate
efficiency variance = (10100*0.50-4770)*6.40
efficiency variance = 1792 F

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