Water Movers, Inc. is known throughout the world for its H2O-X high-capacity wat

Question

Water Movers, Inc. is known throughout the world for its H2O-X high-capacity water pump, used in irrigation systems. The pump’s standard cost is as follows. The company’s predetermined fixed overhead rate is based on an expected capacity of 100,000 direct labor hours per month. Standard Price Standard Quantity Standard Cost Direct materials $7 per pound 16 pounds $112 Direct labor $10 per DLH 5 DLH 50 Variable overhead $7 per DLH 5 DLH 35 Fixed overhead $6 per DLH 5 DLH 30 $227 During the month of September, the company produced 17,240 of the 20,000 pumps that had been scheduled for production in the budget. The company used 327,000 pounds of material during September. The direct labor payroll for the month was $1,039,500 for 94,500 direct labor hours. Variable overhead costs were $649,700; fixed overhead costs were $635,800. The company’s purchasing agent signed a new supply contract that resulted in purchases of 432,300 pounds of direct materials at a total price of $2,809,950. Calculate Water Movers’ direct materials, direct labor, and overhead variances for September. (Round per unit values to 2 decimal places, e.g. 15.25 & final answers to 0 decimal places, e.g. 5,725. If variance is zero, select "Not Applicable" and enter 0 for the amounts.) Direct materials price variance $ Direct materials quantity variance $ Direct labor rate variance $ Direct labor efficiency variance $ Variable overhead spending variance $ Variable overhead efficiency variance $ Fixed overhead spending variance $

Explanation / Answer

Water Movers Inc Standard cost estimate Standard Rate Std Qty Std Cost Std qty for actual output of 17240 Direct Materials                 7.00                16.00      112.00       275,840 Direct Labor               10.00                  5.00         50.00          86,200 Variable Overhead                 7.00                  5.00         35.00          86,200 Fixed Overhead                 6.00                  5.00         30.00          86,200 Total      227.00 Actual details Unit Total Qty Qty/Unit Total Amt Rate   Direct Materials            17,240           327,000         18.97    2,125,500                6.50 Direct Labor            17,240             94,500           5.48    1,039,500              11.00 Variable Overhead            17,240             94,500         5.481       649,700         6.87513 Fixed Overhead            17,240             94,500           5.48       635,800                6.73 Direct Materials Price Variance= Actual Qty Used( Actual Rate-Std Rate) =327000*(6.50-7)          163,500 (F) Direct Material Efficiency Variance =Std Rate ( Actual Qty used-Std qty for actual output)   =7*(32700-275840)          358,120 (U) Direct Labor Rate Variance= Actual Hrs Used( Actual Rate-Std Rate) =94500*(11-10)            94,500 (U) Direct LAbor Efficiency Variance =Std Rate ( Actual Hrs used-Std Hrs for actual output)   =10*(94500-86200)            83,000 (U) Variable Overhead Rate Variance= Actual Qty Used( Actual Rate-Std Rate) =94500*(6.87513-7)            11,800 (F) Variable Overhead Efficiency Variance =Std Rate ( Actual Qty used-Std qty for actual output)   =7*(94500-86200)            58,100 (U) Total Variable Overhead spending Variance= =230000-211200=            18,800 (U) Fixed Overhead Spending Variance=Actual OH -Std Hrs.Std OH rate =635800-86200*6=    118,600.00

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