In: Accounting
The following data were drawn from the records of Finch Corporation.
Planned volume for year (static budget) |
4,700 |
units |
|||||
Standard direct materials cost per unit |
2.40 |
pounds |
@ |
$ |
1.70 |
per pound |
|
Standard direct labor cost per unit |
2.80 |
hours |
@ |
$ |
3.40 |
per hour |
|
Total expected fixed overhead costs |
$ |
23,970 |
|||||
Actual volume for the year (flexible budget) |
5,100 |
units |
|||||
Actual direct materials cost per unit |
2.10 |
pounds |
@ |
$ |
2.30 |
per pound |
|
Actual direct labor cost per unit |
3.10 |
hours |
@ |
$ |
2.90 |
per hour |
|
Total actual fixed overhead costs |
$ |
19,770 |
|||||
Required
Prepare a materials variance information table showing the standard price, the actual price, the standard quantity, and the actual quantity.
Calculate the materials price and usage variances. Indicate whether the variances are favorable (F) or unfavorable (U).
Prepare a labor variance information table showing the standard price, the actual price, the standard hours, and the actual hours.
Calculate the labor price and usage variances. Indicate whether the variances are favorable (F) or unfavorable (U).
Calculate the predetermined overhead rate, assuming that Finch uses the number of units as the allocation base.
Calculate the fixed cost spending variance. Indicate whether the variance is favorable (F) or unfavorable (U).
Calculate the fixed cost volume variance. Indicate whether the variance is favorable (F) or unfavorable (U).
Required A
Materials Variance Information Table |
||
Standard price |
per pound |
|
Actual price |
per pound |
|
Standard quantity for flexible budget |
pounds |
|
Actual quantity used |
pounds |
Required B
Material price variance |
U |
|
Material usage variance |
F |
|
Required C
|
Required D
Labor price variance |
F |
|
Labor usage variance |
U |
Required D
|
1) | STANDARD PRICE PER POUND | 1.7 | |
ACTUAL PRICE PER POUND | 2.3 | ||
STANDARD QUANTITY ON FLEXIBLE BUDGET(5100*2.4) | 12240 | ||
ACTUAL QUANTITY(5100*2.10) | 10710 | ||
2) | Calculate Material Variance | ||
Material price variance(standard price - Actual price)*Actual quantity | |||
(1.7-2.3)*12240 | -6426 | unfavorable | |
Material usage variance=(standard quantity-Actual quantity)*standard price | |||
(12240-10710)*1.7 | 2601 | Favorable | |
3) | |||
STANDARD PRICE PER HOUR | 3.4 | ||
ACTUAL PRICE PER HOUR | 2.9 | ||
STANDARD HOUR FOR FLEXIBLE BUDGET(5100*2.8) | 14280 | ||
ACTUAL HOUR (5100*3.1) | 15810 | ||
4) | Labor rate variance ( standard rate - actual rate )*actual hours | ||
(3.4-29)*15810 | 7905 | Favorable | |
Labor efficiency variance ( Standard hours- Actual hours)* standard price | |||
(14280-15810)*3.4 | -5202 | unfavorable | |
5) | predetemined overhead rate (23970/4700) | 5.1 | per unit |
Fixed cost spending variance | |||
Actual -budegeted | |||
19770-23970 | -4200 | favorable | |
Fixed cost volume variance | |||
(5.1*5100)-23970 | 2040 | favorable |