Silmon Corporation makes a product with the following standard costs: In June th

Question

Silmon Corporation makes a product with the following standard costs:

In June the company produced 5,000 units using 29,750 grams of the direct material and 2,660 direct labor-hours. During the month the company purchased 24,900 grams of the direct material at a price of $5.80 per gram. The actual direct labor rate was $13.60 per hour and the actual variable overhead rate was $2.90 per hour. The materials price variance is computed when materials are purchased. Variable overhead is applied on the basis of direct labor-hours.

Compute the following variances for raw materials, direct labor, and variable overhead, assuming that the price variance for materials is recognized at point of purchase: (Input all amounts as positive values. Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Silmon Corporation makes a product with the following standard costs:

Explanation / Answer

a DM Quantity Variance = ( SQ AQ ) × SP SQ 28500 AQ 29750 SP 34.2 AP 34.51 -42750 42750 U b DM Price Variance = ( SP AP ) × AQ SP 34.2 AP 34.51 AQ 29750 -9222.5 9222.5 U c DL Efficiency Variance = ( SH AH ) × SR SH 2500 AH 2660 SR 6.5 AR 7.2352 -1040 1040 U d DL Rate Variance = ( SR AR ) × AH SR 6.5 AR 7.2352 AH 2660 -1955.632 1995 U e VOH Efficiency Variance = ( SH AH ) × SR SR 1.5 AR 1.5428 AU 2660 -240 240 U f VOH Spending Variance = ( SR AR ) × AU SR 1.5 AR 1.5428 AU 2660 113.8 U

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