Koontz Company manufactures a number of products. The standards relating to one
ID: 2436370 • Letter: K
Question
Koontz Company manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May. Standard Cost per Actual Cost per Unit Unit Direct materials: Standard: 1.90 feet at $4.00 per foot Actual: 1.85 feet at $4.40 per foot $ 7.60 $ 8.14 Direct labor: Standard: 1.10 hours at $16.00 per hour Actual: 1.15 hours at $15.40 per hour 17.60 Variable overhead: Standard: 1.10 hours at $9.00 per hour Actual: 1.15 hours at $8.60 per hour 9.90 9.89 $35.10 $35.74 Total cost per unit Excess of actual cost over standard cost per unit $0.64 The production superintendent was pleased when he saw this report and commented: "This $0.64 excess cost is well within the 4 percent limit management has set for acceptable variances. It's obvious that there's not much to worry about with this product."Explanation / Answer
1a.
material price variance = (standard price - actual price) actual quantity
(4 - 4.4) X (1.85 X 17500)
= .4 x 32375
1b.
Material quantity variance = Standard price ( Standard quantity - Actual quantity)
2a.
=12075 (f)
2b.
3a.
3b.
material price variance = (standard price - actual price) actual quantity
(4 - 4.4) X (1.85 X 17500)
= .4 x 32375
=12950 (u)1b.
Material quantity variance = Standard price ( Standard quantity - Actual quantity)
=4 [ ( 1.90 X 17500) - (1.85 X 17500) ] =4 ( 33250 - 32375) =3500 (f)2a.
Labor rate variance = Actual hours ( standard rate - actual rate) =(1.15 X 17500 ) ( 16 - 15.4) =20125 X .6=12075 (f)
2b.
Labor efficiency variance = ( standard hours - actual hours) X standard rate =[ (1.1 X 17500) - (1.15 X 17500) ] X 16 =(19250 - 20125) X 16 =14000 (U)3a.
Variable overhead rate variance = actual hours ( standard rate - actual rate) =20125 X (9-8.6) =8050(f)3b.
Variable overhead efficiency variance = Standard rate ( Standard hrs - actual hrs) =9 X ( 19250 - 20125) =7875(U)Related Questions
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