Standards 5Ibs.@ $7.00 per pound 3 hrs. $9.00 per hour 4 hrs. @ $12.00 per hour

Question

Standards 5Ibs.@ $7.00 per pound 3 hrs. $9.00 per hour 4 hrs. @ $12.00 per hour 4 hrs.@ $20.00 per hour materials price variance materials labor variable overhead fixed overhead normal capacity 20,000 units materials efficiency variance Actual Information material purchases materials used labor used machine time used variable overhead fixed overhead 19,000 units 50,000 lbs. @ $7.10 per pound 94,000 lbs. 58,000 hrs. 75,000 hrs. $910,000 $1,580,000 $8.95 per hour labor rate variance labor efficiency variance

Explanation / Answer

(a) Materials Price Variance :-

(SR – AR) * AQ

(7 – 7.10) * 50000 = $5000 (U)

(b) Materials Efficiency Variance :-

(SQ – AQ) * SR

SQ = 19000 * 5 = 95000

(95000 – 94000) * 7 = $7000 (F)

(c) Labour Rate Variance:-

(SR – AR) * Actual Hrs

(9 – 8.95) * 58000 = $2900 (F)

(d) Labour Efficiency Variance :-

(S Hrs – A Hrs) * SR

S Hrs = 19000 * 3 = 57000

(57000 – 58000) * 9 = $9000 (U)

(e) Variable O/H Spending Variance :-

(SR – AR) * A Hrs

AR = 910000/75000 = $12.13

SR = $12

(12 – 12.13) * 75000 = $10000 (U)

(f) Fixed O/H Spending Variance :-

Budgeted F. O/H – Actual F.O/H

=1600000 – 1580000 = $20000 (F)

(g) Variable O/H Efficiency Variance:-

(S Hrs – A Hrs) * SR

S Hrs = 19000 * 4 = 76000

A hrs = 75000

(76000 – 75000) * 12 = $12000 (F)

(h) Fixed O/H Volume Variance:-

Budgeted F. O/H – Std F. O/H

Budgeted O/h = 20000 * 4 * 20 = 1600000

Std F. O/H = 19000 * 4 *20 = 1520000

Variance = 1600000 - 1520000 = $80000 (U)

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.