In: Accounting
Variance
Part A
The following standard costs per unit have been established by John, Inc.:
During the month, John produced 1,100 units, which was 100 more units than planned.
They used 3,400 kilograms and 2,050 hours to do so.
Total actual materials spending was $6,460, while total actual labor spending was $27,675.
Required
Choose EITHER materials OR labor, and compute the following variances:
Be sure to denote which you chose (materials or labor) and label each variance as favorable or unfavorable.
Part B
Meghan Company sells two products – Deluxe and Ultra.
The following information was gathered about the two products:
Deluxe | Ultra | |
Budgeted sales in units | 3,200 | 800 |
Budgeted selling price (unit) | $300 | $850 |
Actual sales in units | 3,500 | 1,500 |
Actual selling price (unit) | $325 | $840 |
Required
Calculate the three main revenue variances for the Meghan product.
Be sure to label the variances by name, as well as “favorable” or “unfavorable.”
If there is insufficient information to calculate any of the variances, please denote that clearly.