HayFront produces baseball equipment. The standard direct costs of producing a b
ID: 2456546 • Letter: H
Question
HayFront produces baseball equipment. The standard direct costs of producing a bat is:
Material (3.50 ounces at $1.34 per ounce) $4.69
Labor (0.31 hour at $12.00 per hour) 3.60
At the start of 2018, Hayfront planned to produce 80,000 widgets during the year. Annual variable overhead is budgeted at $56,000 and the standard for fixed overhead is $1.45 per unit.
The following information summarizes the results for 2018:
Actual production was 75,100 units.
Purchased 274,000 ounces of material at a total cost of $334,280.
Used 265,800 ounces of material in production.
Employees worked 21,800 hours and were paid $267,050.
Actual overhead incurred was $164,000.
12. What is the material price variance?
13. What is the total material variance?
What is the labor rate variance?
What is the labor efficiency variance?
What is the controllable overhead variance?
What is the overhead volume variance?
Explanation / Answer
Actual price per unit = 334280 /274000 = $ 1.22 per ounce
Material price variance = AQ(AP-SP)
= 265800 ( 1.22 - 1.34)
= 265800 * - .12
=- $ 31896 (F)
Total material variance= AQ *AP - SQ*SP
= 265800 * 1.22 - (3.5*75100 ) *1.34
= 324276- 352219
= - 27943(f)
3)Actual rate = 267050/21800
= $ 12.25 per hour
Rate variance = AH (AR-SR)
= 21800 ( 12.25 - 12)
= 21800 *.25
= 5450 (U)
Efficiency variance = SR (AH- SH)
= 12 [21800 - (.31*75100)]
= 12 [21800 - 23281]
= 12 * -1481
= - 17772 (F)
5)Variable overhead rate per unit = 56000 / 80000 = $ .70 per unit
Budgeted fixed overhead = 1.45 *80000 = $ 116000
overhead controllable variance = actual overhead - Budgeted overhead based on standard hours
= 164,000 - [116000 + (.7*75100)]
= 164000- [116000+ 52570]
= 164000- 168570
= - 4570(F)
overhead volume variance = Budgeted fixed overhead - standard fixed overhead
= 1.45 * 80000 - 1.45 *75100
= 116000- 108895
= 7105 (U)
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