Eastern Polymers Eastern Polymers, Inc., processes a base chemical into plastic.
ID: 2454660 • Letter: E
Question
Eastern Polymers
Eastern Polymers, Inc., processes a base chemical into plastic. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 6,800 units of product were as follows: s, direct la nufactu Standard Costs Costs Actual Costs 9,500 lbs. at $4.70 1.700 hrs. at $18.00 Rates per direct labor hr., based on 100% of normal capacity of 1,770 direct labor hrs. Direct materials Direct labor Factory overhead 9,400 lbs. at $4.50 1.740 hrs.at $18.20 Variable cost, 4.40 7,410 variable cost Fixed cost, $7.00 $12,390 fixed cost Each unit requires 0.25 hour of direct labor Required: a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable ne the d variance as a positive number Price variance Select Quantity variance Select Total direct materials cost variance SelectExplanation / Answer
a)Price variance = AQ(AR -SR)
= 9400 (4.50 -4.70)
= 9400 * -.20
= -1880(F)
Qunatity variance= SR(Q-SQ)
= 4.70 (9400 - 9500)
= 4.70 * - 100
= - 470(F)
Total variance = price +quantity
= - 1880 (F) + (-470 F)
= - 2350 (F)
b)Labor rate variance = AH (AR -SR)
= 1740 (18.20-18)
=1740 *.20
=348 (U)
Efficiency variance = SR(AH -SH)
= 18 (1740 - 1700)
= 18 * 40
= 720(U)
Total variance = 348 (U) + 720(U)
= 1068(U)
c)Variable factory overhead conrollable variance = Actual variable overhead - (Standard hours * Variable overhead rate per hour)
= 7410 - (1700 *4.40)
= 7410 - 7480
= - 70 (F)
Fixed Factory overhead volume variance = standard fixed overhead for actual output - Budgeted fixed overhead
= 1700 * 7 - 1770 *7
= 11900 - 12390
= - 490(U)
Total factory ovehead cost variance = Actual factory overhead - Standard factory overhead
= [7410+12390] - [1700* 4.40] + [1770*7]
= 19800 - [ 7480+ 12390]
= 19800 - 19870
= - 70(F)
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