Question

The standards for one case of liquid weed killer are as follows: Direct materials 7 lb @ $ 9 /lb Direct labor 4.3 hr @ $ 19.2 /hr Variable overhead (based on machine hours) 1.4 hr @ $ 6.6 /hr During the week ended May 6, the following activity took place: 5,559 machine hours were worked. 29,553 lb of raw material were purchased for inventory at a total cost of $271,297. 4,180 cases of finished product were produced. 29,110 lb of raw material were used. 17,579 labor hours were worked at an average rate of $19.5 per hour. $35,411 actual variable overhead costs were incurred. Required: Calculate each of the following variances. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

a. price variance for raw materials purchased

b raw materials usage variance

c. direct labor rate variance

d. direct labor efficiency variance

e. variable overhead spending variance

f. variable overhead efficiency variance

Answer 1

Material Price Variance	$ 5,320.00
Material quantity variance	$ 3,987.00
Labor rate variance	$        5,279.10
Labor Efficiency variance	$        7,238.40
Variable Overhead Rate Variance	$        1,278.40
Variable Overhead Efficiency Variance	$        1,933.80

Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$            9.00	-	$                9.18	)	x	29553
	-5320
	Variance		$        5,320.00			Unfavourable-U

Material Quantity Variance
(	Standard Quantity	-	Actual Quantity	)	x	Standard Rate
(	29110	-	29553	)	x	$       9.00
	-3987
	Variance		$        3,987.00			Unfavourable-U

Labor Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$         19.20	-	$              19.50	)	x	17597
	-5279.1
	Variance		$        5,279.10			Unfavourable-U

Labour Efficiency Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	17974	-	17597	)	x	$    19.20
	7238.4
	Variance		$        7,238.40			Favourable-F

Variable Overhead Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$            6.60	-	$                6.37	)	x	5559
	$   1,278.40
	Variance		$        1,278.40			Favourable-F

Variable Overhead Efficiency Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	5852	-	5559	)	x	$       6.60
	$   1,933.80
	Variance		$        1,933.80			Favourable-F