Question

Q14-Q18 are based on this case: XTi Co. gathered the following actual results for the current month: Actual Units produced                                                                             1,200 Direct materials purchased 6,400 lbs. @ $11 per lb for $70,400; and used 5,800 lbs. Direct labor cost (2,150 hours @$22 per hour)                              $47,300 Manufacturing overhead costs incurred: $19,350 Variable and $9,650 Fixed overhead. The Static original budgeted production was 1,000 units. The Input standards were:                                                                            Std Quantity   x   Std Price per input =Std Cost per Output U Direct materials                                                       5 lbs./Output unit x   $10/lb. Direct labor                                                            2 hrs./Output unit x $20/hr.     Variable manufacturing overhead                         2 Direct labor hrs x $8 per hr = $16 per unit Fixed mfg. overhead [Budget $10,000]               2 Direct labor hrs x $5 per hr = $10 per unit

Q14. What is the direct materials quantity variance? ____

A. $4400U                B. 2000F           C. 6400U              D. 5800U              E. None of these.

Q15. What is the direct labor efficiency variance? _____

A. $5000F                 B. 700F             C. 4300U              D. 2000F               E. None of these.

Q16. What is the fixed overhead production volume variance? _____   

A. $200F                   B. 350F             C. 200U                 D. 2000F               E. None of these.

Q17. What is the variable overhead controllable variance? _____

A. 2,000F                  B. $150U          C. 2150U              D. 4300U              E. None of these.

Q18. What is the direct materials price variance? ____

A. $2000F                 B. 5800U          C. 4400U              D. 6400 U              E. None of these.

Q19. What is the total overhead controllable variance? _____

A. $150U                  B. 2,000F          C. 2200F               D. 4300U              E. None of these.

Q 20.  What is the direct labor rate variance? _____

A. $4,800U               B. 4,000U         C. 4,300U             D. 2,400U             E. None of these.

Answer 1

A) Material Usage Variance = Std Price*(Std Qty for actual output - Actual Qty)

10*(5lbs per unit*1200units - 5800lbs)

10*200

2000(F) as actual is lower than budgeted

B) Labour Efficiency = Std Rate * (Std hrs for actual output - Actual Hrs)

20 * (2hrs*1200units - 2150hrs )

20* 250hrs

5000(F) as std hrs are more than actual.

C)Fixed overhead production volume variance = Applied Fixed Overhead – Budgeted Fixed Overhead

Where applied fixed overhead rate is $10 per unit

$10*1200units - $10000

2000(F)

D)Variable overhead variance = Std Rate* Actual Output - Actual Overhead

$16*1200 - 19350

$150(U) as Std overhead is lower than actual overhead.

E) Direct materials price variance = Actual Qty * (Std price - Actual Price)

5800lbs * ($10-$11)

$5800(U) as std price is lower than actual price for direct material.

F)Direct labor rate variance = Actual Hrs * (Std rate - Actual Rate)

2150 hrs * (20 - 22)

$4300(U) as actual rate per hr is higher