A company uses a standard cost system. One of the mostpopular products is a cent

Question

A company uses a standard cost system. One of the mostpopular products is a center that houses electronic units. The per-unit standard costs of the center, assuming a "normal"volume of 1,000 units per month asre as follows; direct materials, 100 board-feet of wood at $1.30 perfoot................ $130.00 direct labor, 5 hours at $8.00 perhour..............................................     40.00 manufacturing overhead (applied at $22 perunit)..............................       fixed ($15,000/1,000units of normal production0...........$15.00      variable...........................................................................   7.00       22.00          totalstandard unitcost................................................               $ 192.00 During July, 800 centers were scheduled and produced at thefollowing unit costs: direct materials, 100 fee at $1.20 perfoot..................................... $132.00 direct labor, 5 1/2 hours at $7.80 perhour....................................    42.90 manufacturing overhead, $18,480 /800units.................................      23.10     total actual unitcost.................................................................. $198.00 compute the following cost for the month of July: 1. materials price variance 2. materials quantity variance 3. labor rate variance A company uses a standard cost system. One of the mostpopular products is a center that houses electronic units. The per-unit standard costs of the center, assuming a "normal"volume of 1,000 units per month asre as follows; direct materials, 100 board-feet of wood at $1.30 perfoot................ $130.00 direct labor, 5 hours at $8.00 perhour..............................................     40.00 manufacturing overhead (applied at $22 perunit)..............................       fixed ($15,000/1,000units of normal production0...........$15.00      variable...........................................................................   7.00       22.00          totalstandard unitcost................................................               $ 192.00 During July, 800 centers were scheduled and produced at thefollowing unit costs: direct materials, 100 fee at $1.20 perfoot..................................... $132.00 direct labor, 5 1/2 hours at $7.80 perhour....................................    42.90 manufacturing overhead, $18,480 /800units.................................      23.10     total actual unitcost.................................................................. $198.00 compute the following cost for the month of July: 1. materials price variance 2. materials quantity variance 3. labor rate variance     total actual unitcost.................................................................. $198.00 compute the following cost for the month of July: 1. materials price variance 2. materials quantity variance 3. labor rate variance

Explanation / Answer

1. Materials Price Variance    ===================    MPV      =      (ActualQuantity x StandardPrice)   -   (Actual Quantity xActual Price)                  =      (100feet x 800 units x $1.30)   -   (100feet x 800 units x 1.20)                  =      $104,000   -   $96,000      =      $8,000F 2. Materials QuantityVariance    ======================    MQV      =      (ActualQuantity   -   Standard Quantity) xStandard price per unit                   =      (110feet x 800 units  -   100 feet x 800units) x $1.30                   =      (88,000feets   -   80,000feets)   x   $1.30                     =      $104,000U 3. Labor rate variance     ===============       LRV      =   (ActualRate   -   StandardRate)   x   Actual hours ofproduction                    =   (5.50 x$7.80   -   5.00 x$8.00)   x   800 units                    =   ($42.90   -   $40.00)   x800units                                 =            $2,320U   2. Materials QuantityVariance    ======================    MQV      =      (ActualQuantity   -   Standard Quantity) xStandard price per unit                   =      (110feet x 800 units  -   100 feet x 800units) x $1.30                   =      (88,000feets   -   80,000feets)   x   $1.30                     =      $104,000U 3. Labor rate variance 3. Labor rate variance 3. Labor rate variance     ===============       LRV      =   (ActualRate   -   StandardRate)   x   Actual hours ofproduction                    =   (5.50 x$7.80   -   5.00 x$8.00)   x   800 units                    =   ($42.90   -   $40.00)   x800units                                 =            $2,320U  

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