Show your calculations on the next page Standard costs and actual costs for dire

Question

Show your calculations on the next page Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 24,000 units of product were as follows. Each unit requires 0.5 hours of direct labor at standard) Standard Cost Actual Cost 9,.800 Ibs. @ 16 Direct Materials 10,000 Ibs.@ Direct Labor 12,000 Hrs.@ Factory Overhead: 20 12,200 Hrs. @ 1 Rates per direct labor hour based on 100% capacity of 12,500 labor hours: Variable Cost Fixed Cost S 12.00 per DL Hr S 140,000 total variable cost S 7.50 per DL Hr S 93,750 total fixed cost Instructions: Calculate the following variances. Show all work: (a) Direct Materials Quantity Variance (b) Direct Materials Price Variance (c) Direct Labor Time Variance (d) Direct Labor Rate Variance (e) Factory Overhead Controllable Variance (0) Factory Overbead Volume Variance Circle Fav. UnFav. Fav. UnFav Fav. UnFav. Fav. UnFav Fav. UnFav. Fav. UnFav. Hint: For FOH use ACTUAL PRODUCTION at STANDARD USAGE

Explanation / Answer

Solution:

a)

Direct Materials quantity variance = Std Price (Std Quantity used for actual production – Actual Quantity Used)

= $15 (10,000 – 9,800)

= $3,000 Favorable

b)

Direct Materials Price Variance = Actual Quantity Purchased (Actual Price – Std Price)

= 9,800 ($16 - $15)

= $9,800 Unfavorable

Note – It is assumed that the actual quantity purchased is 9,800 lbs

c)

Direct Labor Time Variance = Std Rate (Std Hours required for actual production – Actual Hours)

= $20 (12,000 – 12,200)

= $4,000 Unfavorable

d)

Direct Labor Rate Variance = Actual Hours (Actual Rate – Std Rate)

= 12,200 ($19 – 20)

= $12,200 Favorable

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