Helix Company produces several products in its factory, including a karate robe.

Question

Helix Company produces several products in its factory, including a karate robe. The company uses a standard cost system to assist in the control of costs. According to the standards that have been set for the robes, the factory should work 780 direct labor-hours each month and produce 2,600 robes. The standard costs associated with this level of production are as follows:

  

  Variable manufacturing overhead
  (based on direct labor-hours)

$ 23.20   

  

    During April, the factory worked only 760 direct labor-hours and produced 2,700 robes. The following actual costs were recorded during the month:

  

  Variable manufacturing overhead

  

At standard, each robe should require 3.0 yards of material. All of the materials purchased during the month were used in production.

Compute the materials price and quantity variances for April: (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Round your intermediate calculations to 2 decimal places and final answers to the nearest dollar amount.)

Compute the labor rate and efficiency variances for April: (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Do not round your intermediate calculations. Round your final answers to the nearest dollar.)

Compute the variable manufacturing overhead rate and efficiency variances for April: (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Round your intermediate calculations to 2 decimal places and final answers to the nearest dollar amount.)

Total Per Unit
of Product   Direct materials $ 49,920   $ 19.20      Direct labor $ 8,060 3.10   

  Variable manufacturing overhead
  (based on direct labor-hours)

$ 2,340 0.90   

$ 23.20   

Explanation / Answer

DM Price variance = Stnd price vs actual price x actual quantity purchased
DM Quantity variance = Stnd qty vs actual qty x stnd price

DL Rate variance = Standard rate vs actual rate x actual hours
DL Efficiency variance = Standard hrs vs actual hrs x standard rate

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