Question

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KAYAK Corporation makes a product with the following standard costs: Standard Quantity Stnd Price/Rate per unit...

KAYAK Corporation makes a product with the following standard costs:

Standard Quantity

Stnd Price/Rate per unit of Measure

Direct Materials (Lbs)

2.8 lbs

$4.00 / lb

Direct Labor (Hrs)

0.20 hrs / unit

$21.00 / hr

Variable OH Costs (based on Hrs)

0.20 / hr

$4.00 / hr

Actual Results:
9,600 units produced
Direct material - $3.70 per lb for Total Cost of $99,937
Direct Labor – Total Cost of $37,050 with average labor rate of $19.00 Total Overhead Cost of $7,995 allocated based on direct labor hours

Required:

a. Compute the total product cost variance, in total. (7.5pts) b. Compute the total materials quantity variance. (5pts)
c. Compute the materials price variance. (5pts)
d. Compute the total labor efficiency variance. (5pts)

e. Compute the labor rate variance. (5pts)
f. Compute the total variable overhead efficiency variance. (5pts) g. Compute the variable overhead rate variance. (5pts)

Solutions

Expert Solution

  • All working forms part of the answer
  • Working data

Actual DATA for

9600

units

Quantity (AQ)

Rate (AR)

Actual Cost

Direct Material

27010

$                   3.70

$           99,937.00

Direct labor

1950

$                19.00

$           37,050.00

Variable Overhead

1950

$                   4.10

$             7,995.00

TOTAL

$ 144982

Standard DATA for

9600

units

Quantity (SQ)

Rate (SR)

Standard Cost

[A]

[B]

[A x B]

Direct Material

( 2.8 lbs x 9600 units)=26880 lbs

$                   4.00

$     107,520.00

Direct labor

( 0.2 hours x 9600 units)=1920 hours

$                21.00

$       40,320.00

Variable Overhead

( 0.2 hours x 9600 units)=1920 hours

$                   4.00

$         7,680.00

TOTAL

$ 155,520

  • [a]

Total Product Cot variance = 155520 – 144982 = $ 10,538 Favourable

  • [b]

Material Quantity Variance

(

Standard Quantity

-

Actual Quantity

)

x

Standard Rate

(

26880

-

27010

)

x

$                           4.00

-520

Variance

$                  520.00

Unfavourable-U

  • [c]

Material Price Variance

(

Standard Rate

-

Actual Rate

)

x

Actual Quantity

(

$                                4.00

-

$                       3.70

)

x

27010

8103

Variance

$              8,103.00

Favourable-F

  • [d]

Labour Efficiency Variance

(

Standard Hours

-

Actual Hours

)

x

Standard Rate

(

1920

-

1950

)

x

$                        21.00

-630

Variance

$                  630.00

Unfavourable-U

  • [e]

Labor Rate Variance

(

Standard Rate

-

Actual Rate

)

x

Actual Labor Hours

(

$                              21.00

-

$                    19.00

)

x

1950

3900

Variance

$              3,900.00

Favourable-F

  • [f]

Variable Overhead Efficiency Variance

(

Standard Hours

-

Actual Hours

)

x

Standard Rate

(

1920

-

1950

)

x

$                           4.00

-120

Variance

$                  120.00

Unfavourable-U

  • [g]

Variable Overhead Rate Variance

(

Standard Rate

-

Actual Rate

)

x

Actual Labor Hours

(

$                                4.00

-

$                       4.10

)

x

1950

-195

Variance

$                  195.00

Unfavourable-U

ekkarill92 answered 2 years ago
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