In: Accounting
Elements of Labor and Variable Overhead Variances
Chelsea Fabricating applies variable overhead to products on the
basis of standard direct labor hours. Presented is selected
information for last month when 10,000 units were produced.
Required
Solve for items "a" through "h."
Do not round answers for items b. (standard hours/unit).
Direct labor | Variable overhead | |||
---|---|---|---|---|
Actual | a. $Answer | f. $Answer | ||
Standard hours/unit | b. $Answer | b.$Answer | ||
Actual hours (total) | 6,200 | 6,200 | ||
Standard rate/hour | $36.00 | $24.00 | ||
Actual rate | $37.80 | |||
Flexible budget | $90,000 | $60,000 | ||
Labor rate or variable overhead spending variance | c. $Answer | AnswerUF | g. $Answer | AnswerUF |
Efficiency variances | d. $Answer | AnswerUF | h. $Answer | AnswerUF |
Total flexible budget variance | e. $Answer | AnswerUF | $2,500 | F |
Req A: | ||||||
Actual Labour cost (Actual hours*Actual rate) | 234360 | |||||
(6200 hours*$37.80) | ||||||
Req b: | ||||||
Flexible Budget (Total Std cost) | $90,000 | |||||
Std rate per hour | 36 | |||||
Std Hours alloedd ($ 90,000 /36) | 2500 Hours | |||||
Req C: | ||||||
Labour rate variance = Actual hours (Std rate-Actual rate) | ||||||
6200 hours (36.00-37.80)= $11,160 U | ||||||
Req d: | ||||||
Efficiency Variance= Std rate (Std hours-Actual hours) | ||||||
36.00 (2500-6200)= $133,200 U | ||||||
Req e | ||||||
Total Flexible Budget Variancce= Std labour cost -Actual labour ccost | ||||||
90,000 -234360 = $144,360 | ||||||
Req f: | ||||||
Std Variable OH cost (Flexible budget): $ 60,000 | ||||||
Flexible budget variane: $ 2500 F | ||||||
Flexible budget variance= Std variable OH cost -Actual variable cost | ||||||
2500 = 60,000 - Actual Variable OH cost | ||||||
Actual Variable Oh cost = $57,500 | ||||||
Req b: Std Variable OH cost: $ 60,000 | ||||||
Std rate per hour: $ 24 | ||||||
Std Hours: (60,000/24):; 2500 hours | ||||||
Req g: | ||||||
Variable Oh rate variance= Aactual hours (Std OH rate-Actual Oh rate) | ||||||
6200 hours *24- $ 57500 =91300 F | ||||||
Req h: | ||||||
Variable OH efficeincy variance= Std OH rate (Std hours-Actual hours) | ||||||
24.00 (2500-6200)= $ 88,800 U |