Question

Material, Labor, and Variable Overhead Variances The following summarized manufacturing data relate to Kiosse Corporation’s May operations, during which 2,000 finished units of product were produced. Normal monthly capacity is 1,100 direct labor hours.

			Standard Units Costs			Total Actual Costs
Direct material
Standard (3 lb. @ $2.00/lb.)			$6
Actual (6,200 lb. @ $2.20/lb.)					$13,640
Direct labor
Standard (0.5 hr. @ $14/hr.)			$7
Actual (980 hrs. @ $13.70/hr.)					13,426
Variable overhead
Standard (0.5 hr. @ $4/hr.)			$2
Actual			-		4,200
Total			$15		$31,266

Assume that the 6,200 lb. of materials purchased were all used in producing the 2,000 completed units. Determine the materials price and efficiency variances, labor rate and efficiency variances, and variable overhead spending and efficiency variances.

Do not use negative signs with any of your answers. Next to each variance answer, select either "F" for Favorable or "U" for Unfavorable.

Materials Variances
Actual cost:	Answer
Split cost:	Answer
Standard cost:	Answer
Materials price	Answer	AnswerFU
Materials efficiency	Answer	AnswerFU

Labor Variances
Actual cost:	Answer
Split cost:	Answer
Standard cost:	Answer
Labor rate	Answer	AnswerFU
Labor efficiency	Answer	AnswerFU

Variable Overhead Variances
Actual cost:	Answer
Split cost:	Answer
Standard cost:	Answer
Variable overhead spending	Answer	AnswerFU
Variable overhead efficiency	Answer	AnswerFU

Answer 1

• Requirements asked

Material Variance
Actual Cost	$13,640	6200 lbs x $ 2.2
Split Cost	$12,400	6200 lbs x $ 2
Standard Cost	$12,000	2000 units x 3 lb x $ 2
Material Price Variance	$1,240	Unfavourable
Material Efficiency Variance	$400	Unfavourable

Labor Variance
Actual Cost	$13,426	980 x $ 13.70
Split Cost	$13,720	980 x $ 14
Standard Cost	$14,000	2000 units x 0.5 hr x $14
Labor rate Variance	$294	Favourable, as Actual rate is LESS than Standard rate
Labor Efficiency Variance	$280	Favourable, as Actual hr is LESS than Standard hr

Variable Overhead Variance
Actual Cost	$4,200
Split Cost	$3,920	980 x $ 4
Standard Cost	$4,000	2000 x 0.5hrs x $ 4
Variable Overhead rate Variance	$280	Unfavourable
Variable Overhead Efficiency Variance	$80	Favourable