www.zeallsoft.com Koontz Company manufactures a number of products. The standard

Question

www.zeallsoft.com 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. Standard Cost per Unit Actual Cost per Unit Direct materials $5.40 Standard: 1.80 feet at $3.00 per foot Actual: 1.80 feet at $3.30 per foot $5.94 Direct labor 16.20 Standard: 0.90 hours at $18.00 per hour Actual: 0.92 hours at $17.50 per hour 16.10 Variable overhead 4.50 Standard: 0.90 hours at $5.00 per hour Actual: 0.92 hours at $4.50 per hour 4.14 Total cost per unit $26.10 $26.18 Excess of actual cost over standard cost per unit $0.08 The production superintendent was pleased when he saw this report and commented: "This $0.08 excess cost is well within the 2 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 12,000 units. Variable overhead cost is assigned to products on the basis of direct labor-hours. There were no beginning or ending inventories of materials

Explanation / Answer

Direct material Variance 12000*SQ*SR 12000*AQ*SR AQ*AP 12000*1.80*3 12000*1.8*3 12000*1.8*3.3 64800 64800 71280 Material Price Variance 71280-64800 6480 Unfavorable Material Quantity Variance 64800-64800 0 Labor Varaince 12000*SH*SR AH*SR AH*AP =12000*0.9*18 =12000*0.92*18 =12000*0.92*17.5 194400 198720 193200 Labor Price Variance =198720-193200 5520 Favorable Labor Efficency Varaince =194400-198720 4320 Unfavorable Variable overhead variance 12000*SH*SR AH*SR AH*AP =12000*0.9*5 =12000*0.92*5 =12000*0.92*4.5 54000 55200 49680 Overhead Price Variance 55200-49680 5520 Favorable Overhead Efficency Varaince =54000-55200 1200 Unfavorable Per Unit Varaince Material Price Variance 0 Material Quantity Variance 6480 Unfavorable 6480 0.54 Labor Price Variance -5520 Favorable Labor Efficency Varaince 4320 Unfavorable -1200 -0.1 Overhead Price Variance -5520 Favorable Overhead Efficency Varaince 1200 Unfavorable -4320 -0.36 Excess of actual over standard cost per unit 0.08 Excess of actual over standard cost per unit 0.08 Less Portion attributable to labor inefficency Labor efficency variance -0.1 Variable overhaed efficency variance -0.36 -0.46 Portion Attributable to other variance 0.54

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