Question

BlayCo's standard and actual costs per unit for the most recent period, during which 600 units were actually produced, are given below:

Standard Quantity/Hours:   Materials- 4 feet per unit, Labor -unit 2 hours, Variable MOH- 2 hours per unit

Standard Price/Rate: Materials $2.00 per feet, Labor-$8.00foot per hour, Variable MOH- $3.00 per hour

Actual Quantity/Hours: Materials -1,000 feet, Labor-800 hours, Variable MOH- 800 hours

Actual Total Cost: Materials-$1,500, Labor-$4,000, Variable MOH-$2,000

Required (show your work): From the foregoing information, compute the following variances. Show whether the variance is favorable (F) or unfavorable (U):

Thank you.

Answer 1

Solution:

All the variances are calculated as below:

Direct Material Price Variance
Actual Price ($1,500 / 1,000 feet)	$1.50	per foot
Standard Price	$2.00	per foot
Variance or Difference in Price	$0.50	per foot
x Actual Quantity PURCHASED/USED	1,000	foot
Direct Material Price Variance	$500	Favorable
Direct Material Quantity/Efficiency/Usage Variance
Standard Quantity Allowed for actual production:
Actual Production/Activity	600	Units
x Allowed Standard Quantity Per Unit	4	feet
Total Standard Quantity Allowed for actual production (SQAP)	2,400	feet
Actual Quantity USED	1,000	feet
Variance or Difference in Quantity	1,400	feet
x Standard Price (SP)	$2.00	per lbs
Material Quantity/Efficiency Variance	$2,800	Favorable

Labor Rate Variance
Actual Hourly Rate ($4,000 / 800 hours)	$5.00	Per Hour
Standard Hourly Rate	$8.00	Per Hour
Variance or Difference in Rate	$3.00	Per Hour
x Actual Labor Hours worked	800	Hours
Labor Rate Variance	$2,400	Favorable
Labor Quantity / Efficiency Variance
Standard Hours Allowed for actual production:
Actual Production	600	Units
x Allowed Standard Hours Per Unit	2.000	hours
Total Standard Hours Allowed for actual production (SHAP)	1,200	hours
Actual Labor Hours Worked	800	hours
Variance or Difference in Hours	400	hours
x Standard Hourly Rate (SHR)	$8.00	per hour
Labor Efficiency Variance	$3,200	Favorable

Variable Overhead Rate/Spending/Cost Variance
Actual Hourly Variable Overhead Rate ($2,000 / 800 hours)	2.50	Per Hour
Standard Hourly Variable Overhead Rate	3.00	Per Hour
Variance or Difference in Rate	0.50	Per Hour
x Actual Hours Worked	800	Hours
Variable Overhead Rate/Spending Variance	$400	Favorable
Variable Overhead Efficiency/Quantity Variance
Standard Hours Allowed for actual production:
Actual Production	600	Pools
x Allowed Standard Hours Per Unit	2	Hours
Total Standard Hours Allowed for actual production (SHAP)	1200	Hours
Actual Hours Worked (AH)	800	Hours
Variance or Difference in Hours	400	hours
x Standard Hourly Variable Overhead Rate	$3.00	per hour
Variable Overhead Efficiency Variance	$1,200	Favorable

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