Question

Fortes 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		9.7	ounces	$	7.80	per ounce
Direct labor		0.4	hours	$	38.70	per hour
Variable manufacturing overhead		0.40	hours	$	6.10	per hour

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

Actual output				7300	units
Raw materials purchased				49,900	ounces
Actual cost of raw materials purchased	$			372,350
Raw materials used in production				70,840	ounces
Actual direct labor-hours				2610	hours
Actual direct labor cost	$			105,800
Actual variable overhead cost		$	14,941

Required:

Enter all numbers as positive and rounded to the nearest dollar
Materials price variance	$
Materials quantity variance	$
Labor rate variance	$
Labor efficiency variance	$
Variable overhead rate variance	$
Variable overhead efficiency variance	$

Answer 1

• Workings

Actual DATA for		7300	units
	Quantity (AQ)	Rate (AR)	Actual Cost
Direct Material	70840	$              7.462….. [372350/49900]	$        528,602.69
Direct labor	2610	$              40.54 [105800/2610]	$        105,800.00
Variable Overhead	2610	$                5.72 [14941/2610]	$           14,941.00

Standard DATA for		7300	units
	Quantity (SQ)	Rate (SR)	Standard Cost
	[A]	[B]	[A x B]
Direct Material	( 9.7 ounces x 7300 units)=70810 ounces	$                   7.80	$     552,318.00
Direct labor	( 0.4 hours x 7300 units)=2920 hours	$                38.70	$     113,004.00
Variable Overhead	( 0.4 hours x 7300 units)=2920 hours	$                   6.10	$       17,812.00

• Requirement

Material Price Variance [material used basis]	$                                                  23,949	Favourable-F
Material Quantity Variance	$                                                        234.00	Unfavourable-U
Labor Rate Variance	$                                                     4,793.00	Unfavourable-U
Labour Efficiency Variance	$                                                  11,997.00	Favourable-F
Variable Overhead Rate Variance	$                                                        980.00	Favourable-F
Variable Overhead Efficiency Variance	$                                                     1,891.00	Favourable-F

• Workings for Variances

Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$                        7.80	-	$                       7.46	)	x	70840
	23949.31463
	Variance		$            23,949.31			Favourable-F
Material Quantity Variance
(	Standard Quantity	-	Actual Quantity	)	x	Standard Rate
(	70810	-	70840	)	x	$                           7.80
	-234
	Variance		$                  234.00			Unfavourable-U
Labor Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                     38.70	-	$                    40.54	)	x	2610
	-4793
	Variance		$              4,793.00			Unfavourable-U
Labour Efficiency Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	2920	-	2610	)	x	$                        38.70
	11997
	Variance		$            11,997.00			Favourable-F
Variable Overhead Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                        6.10	-	$                       5.72	)	x	2610
	980
	Variance		$                  980.00			Favourable-F
Variable Overhead Efficiency Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	2920	-	2610	)	x	$                           6.10
	1891
	Variance		$              1,891.00			Favourable-F