4.) LeatherWood manufactures armdhairns. The company oes a standard cost account

Question

4.) LeatherWood manufactures armdhairns. The company oes a standard cost accounting system. In March 2014 11200 amchairs were produced The standard and actual cost data applied to the month of March when normal capacity wa 14,000 direct labor hours. All maberials purchased were used in production Cost Element Direct materials Standard (per unit) 8 meters at 5450 per meter Actual 376 544 for 92,840 meters 82 meters per unit and $410 per meter) Direct labor 12 hours at $33.00 per hour $202,137 60 for 24.336 hours 28 hours per unit and 524.30 per hour 2 hours at 6.00 per hour $49000 Ssed overhead xed $3.50 variable $2.50 $36.000 variable overhead Overhead Overhead is applied on the basis of direct labor hours At normal overhead costs capacity, budget were $49,000 and budgered variable overthead costs were $36000 Compute "total price and quantity varlances for direct materials and direct abor" and total, controllable and volume variances for manufacturing overhed(30 pts

Explanation / Answer

Computation of Direct Material Price & Quantity Variance Direct Material Price Price variance (SP-AP)AQ (4.50-4.10)*91840 $36,736 Favourable Direc Material Quantity Variance (SQ-AQ)SP ((11200*8)-91840))*4.50 ($10,080) Unfavourable Total Direct Material Variance MPV+MQV $26,656 Favourable Computation of Direct Labour Rate & Efficiency Variance Direct Labour Rate variance (SR-AR)*AH (13-14.10)*14336 ($15,770) Un Favourable Direct Labour Efficiency Variance (SH-AH)SR ((11200*1.2)-14336)*13 ($11,648) Un Favourable Direct Labour Variance LRV+LEV ($27,418) Un Favourable Computation of variable Overhead   Rate & Efficiency & Spending   Variance Direct Variable Overhead Rate Variance ( SP-AP)*AH (2.50-(36000/14336))*14336 ($160) Un Favourable Direct Variable Overhead Efficiency Variance (SH-AH)SP ((11200*1.2)-14336)*2.50 ($2,240) Un Favourable Direct Variable Overhead Spending Variance Price variance+ Quantity Variance ($2,400) Un Favourable Computation of Fixed Overhead Rate & Volume & Spending   Variance Direct Fixed Overhead Rate Variance Budgeted OH- Actual OH 49000- 49000 Direct Fixed Overhead Volume Variance Standard Rate applied on standard Hour for actual Qty- Budgeted OH ((11200*1.2)*$3.50-$49000 ($1,960) Unfavourable Direct Fixed Overhead Spending Variance Price variance+ Quantity Variance ($1,960) Favourable

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