Koontz Company manufactures a number of products. The standards relating to one
ID: 2438180 • 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.
7.98
16.15
28.88
The production superintendent was pleased when he saw this report and commented: “This $0.73 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."
Actual production for the month was 18,000 units. Variable overhead cost is assigned to products on the basis of direct labor-hours. There were no beginning or ending inventories of materials.
Required:
1. Compute the following variances for May:
a. Materials price and quantity variances.
b. Labor rate and efficiency variances.
c. Variable overhead rate and efficiency variances.
2. How much of the $0.73 excess unit cost is traceable to each of the variances computed in (1) above.
3. How much of the $0.73 excess unit cost is traceable to apparent inefficient use of labor time?
JUST FILL OUT THE TABLES PLEASE!!!
Standard Cost per Unit Actual Cost per Unit Direct materials: Standard: 1.90 feet at $4.20 per foot $7.98
Actual: 1.85 feet at $4.60 per foot $ 8.51 Direct labor: Standard: 0.95 hours at $17.00 per hour16.15
Actual: 1.00 hours at $16.50 per hour 16.50 Variable overhead: Standard: 0.95 hours at $5.00 per hour 4.75 Actual: 1.00 hours at $4.60 per hour 4.60 Total cost per unit $28.88
$ 29.61 Excess of actual cost over standard cost per unit $ 0.73 1a. Compute the following variances for May, materials price and quantity variances. 1b. Compute the following variances for May, labor rate and efficiency variances 1c. Compute the following variances for May, variable overhead rate and efficiency variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) Show less 1a. Materials price variance Materials quantity variance 1b. Labor rate variance Labor efficiency variance 1c. | Variable overhead rate variance Variable overhead efficiency varianceExplanation / Answer
1) 1a: MPV (actual price - std. price) actual usage (4.6 - 4.2)*33300 13320 U 1b: MQV (Std usage for actual - actual usage) std price (18000*1.90 - 33300)*4.2 3780 F 2a: LRV (actual rate - std. rate) actual hours (16.5-17)*18000 9000 F 2b: LEV (Std hours for actual - actual hours) std rate (18000*0.95 - 18000)*17 15300 U 3a: VORV (actual VOrate - std. VO rate) actual hours (4.6-5)*18000 7200 F 3b: VOEV (Std hours for actual - actual hours) std VO rate (18000*0.95 - 18000)*5 4500 U 2) Material Price Variance -13320 Quantity vari 3780 Lab Rate Variance 9000 Efficiency vari -15300 V overhead Rate Variance 7200 Efficiency vari -4500 Total Variance effect -13140 Total Actual units of production 18000 Excess of actual over standard per unit -0.73 3) Excess of actual over standard cost per unit -0.73 Less: portion attributable to labor inefficiency: Labor efficiency variance 0.85 Variable overhead efficiency variance 0.25 Portion due to other variances 0.37
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