In: Accounting
Hawley Inc. manufactures designer iPod cases for national distribution. The standard costs for the manufacture of designer iPod cases were as follows:
Standard Costs Actual Costs
Direct materials 1,500 lbs. at $35 1,600 lbs. at $32
Direct labor 4,800 hrs. at $11 4,500 hrs. at $11.80
Factory overhead Rates per labor hour, based on 100% of normal capacity of 5,500 labor hrs.:
Variable cost, $2.40 $12,300 variable cost
Fixed cost, $3.50 $19,250 fixed cost
Instructions
1. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance for the designer iPod cases.
2. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance for the designer iPod cases.
3. Determine the variable factory overhead controllable variance, fixed factory overhead volume
variance, and total factory overhead cost variance for the designer iPod cases.
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Standard Quantity (SQ) | Standard Price (SP) | Standard Unit Cost | ||
Direct Material | 1500 | 35 | 52500 | |
Direct Labor | 4800 | 11 | 52800 | |
Actual Quantity | Actual Rate (AP) Given | Actual Cost | ||
Direct Material | 1600 | 1600 | 32 | 51200 |
Direct Labor | 4500 | 4500 | 11.8 | 53100 |
Direct Material Price Variance | (SP-AP)*AQ | (35-32)*1600 | 4800 | Favorable |
Direct Material Quantity Variance | (SQ-AQ)*SP | (1500-1600)*35 | -3500 | Unfavorable |
Total Material Variance | Price Var+Quantity Var | 1300 | Favorable | |
Direct Labor Rate Variance | (SP-AP)*AQ | (11-11.8)*4500 | -3600 | Unfavorable |
Direct Labor Efficiency Variance | (SQ-AQ)*SP | (4800-4500)*11 | 3300 | Favorable |
Total Labor Variance | Price Var+Quantity Var | -300 | Unfavorable | |
Controllable Variable Ovrhead Variance: | 11520-12300= 780 U | |||
Fixed Overhead Volume Variance: | (5500-4800)*3.5=2450 U | |||
Total Overhead Variance: | 780+2450=3230 U |