Question

Direct Materials Variances

Bellingham Company produces a product that requires 9 standard pounds per unit. The standard price is $8 per pound. If 3,600 units required 31,400 pounds, which were purchased at $8.32 per pound, what is the direct materials (a) price variance, (b) quantity variance, and (c) total direct materials cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

a. Direct materials price variance	$	Favorable
b. Direct materials quantity variance	$
c. Total direct materials cost variance	$

Factory Overhead Controllable Variance

Bellingham Company produced 6,800 units of product that required 2 standard hours per unit. The standard variable overhead cost per unit is $3.50 per hour. The actual variable factory overhead was $48,410. Determine the variable factory overhead controllable variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
$  

PART 2

Direct Labor Variances

Bellingham Company produces a product that requires 2 standard hours per unit at a standard hourly rate of $10.00 per hour. If 5,500 units required 11,200 hours at an hourly rate of $9.70 per hour, what is the direct labor (a) rate variance, (b) time variance, and (c) total direct labor cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

a. Direct labor rate variance	$
b. Direct labor time variance	$
c. Total direct labor cost variance	$

Answer 1

Solution:

Direct Materials Variances

Direct Materials Price Variance	$10,048	Unfavorable
Direct Materials Quantity Variance	$8,000	Favorable
Direct Materials Cost Variance	$2,048	Unfavorable

Working:

Direct material price variance = (Actual Price - Standard Price)*Actual Quantity
=(8.32-8)*31,400
=$10,048 Unfavorable
Direct materials quantity variance = (Actual Quantity - Standard Quantity)*Standard Price
=(31,400-(3,600*9))*8
=(31,400-32,400)*8
=8,000 favorable
Direct material cost variance = (standard price*standard quantity)-(actual quantity*actual price)
=(8*32,400)-(31,400*8.32)
=259,200 - 261,248
=$2,048 Unfavorable

Variable factory Overhead Controllable variance = Actual overhead expense - (budgeted overhead per hour * standard number of Hours)
=$48,410-(6,800*2*3.50)
=$48,410-$47,600
=$810 Unfavorable

Direct Labor Variances

Direct Labor rate variance	$3,360	Unfavorable
Direct Labor time variance	$2,000	Unfavorable
Direct Labor cost variance	$27,700	​​​​​​​Unfavorable

Working:
Direct labor rate variance = (Standard rate - Actual rate)*Actual hours
=(10-9.70)*11,200
=$3,360 unfavorable
Direct labor time variance = (Standard hours - Actual hours)*Standard rate
=(5,500*2-11,200)*10
=$2,000 Unfavorable
Direct labor cost variance = Direct labor rate variance + Direct labor time variance
=$3,360+$2,000
=$27,700 unfavorable