Direct material ................3 pounds@4/pound = $12 per unit Direct labor....

Question

Direct material ................3 pounds@4/pound = $12 per unit
Direct labor.....................2 hours @ $8/hour= $16 per unit
Variable overhead............. 2 hours @ $5/hour= $ 10 per unit

Actual production figures for the past year were as follows:

Units produced .............500
Direct material used .............1,600 pounds
Direct material purchased (3,000 pounds)...$12,300
Directed labor cost (950 hours).....$7,790
Variable overhead cost incurred........$4,655

The materials price variance is:
The materials quantity variance is:
The labor rate variance is:
The labor efficiencey variance is:
The variable overhead spending variance
The variable overhead efficiency variance is

Explanation / Answer

Price variance: 3,000lbs purchased times *4/pound is 12,000. Amount spent was 12,300 so price variance is 300 unfavorable. Quantity variance: (3*500- 1600)* $4= 400 unfavorable Rate 7790/950= $8.20. Standard is $8 so we have 500*2 *.20= $200 unfavorable. Efficiency is (2*500-950)* $8= $400 favorable. Spending is 10*500- 4465= $535 favorable Efficiency is (2*500-950) * 5= $250 favorable

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