Question

Complete the grey boxes with the variance amounts and if the variance is favorable or unfavorable.
	Standard Costs/Quantities		Actual Costs/Quantities
Materials Cost	$2.00	per unit	$1.80	per unit
Material Quantity	585000	pounds	640000	pounds
Labor Cost	$13.00	per hour	$15.00	per hour
Labor Hours	21000	hours	18900	hours
Variable Overhead Rate	$9.75	per labor hours	$9.35	per labor hours
	Amount	Favorable/Unfavorable
Materials Price Variance
Materials Cost Variance
Labor Rate Variance
Labor Efficiency Variance
Variable Overhead Spending
Variable Overhead Efficiency

Answer 1

Standard Cost:						Amount	F/UF
Particulars	Qty	Rate	Amount		Material Price Variance:
Material Cost	585000	2.00	1170000		(SP-AP)AQ
Labor Cost	21000	13.00	273000		(2-1.80)*640000	128000	Favourable
Variable OH	21000	9.75	204750
			1647750		Material Efficiency Variance:
					(SQ-AQ)SP
Actual Cost:					(585000-640000)*2	-110000	Unfavourable
Particulars	Qty	Rate	Amount
Material Cost	640000	1.80	1152000		Material Cost Variable	18,000	Favourable
Labor Cost	18900	15.00	283500		(SC-AC)
Variable OH	18900	9.35	176715
			1612215		Labor Price Variance:
					(SP-AP)AQ
					(13-15)*18900	-37800	Unfavourable
Short forms used:					Labor Efficiency Variance:
AQ	Actual Quantity				(SQ-AQ)SP
SQ	Standard Quantity				(21000-18900)*13	27300	Favourable
AP	Actual Price
SP	Standard Price				Labor Cost Variable	-10,500	Unfavourable
SC	Standard Cost				(SC-AC)
AC	Actual Cost
					VOH Spending Variance:
					(SP-AP)AQ
					(9.75-9.35)*18900	7560	Favourable
					VOH Efficiency Variance:
					(SQ-AQ)SP
					(21000-18900)*9.75	20475	Favourable
					Labor Cost Variable	28,035	Favourable
					(SC-AC)