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 4,400 units using 23,690 grams of the direct material and 2,600 direct labor-hours. During the month the company purchased 24,300 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 $1.90 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) Direct materials quantity variance=(SQ-AQ)*SP=(4,400*5.1-23,690)*$6=-$7,500-U

a)Direct materials price variance=(SP-AP)*AQ=($6-$5.8)*23,690=$4,738-F

c)Direct labor efficiency variance=(SH-AH)*SR=(4,400*0.5-2,600)*$13=-$5,200-U

e) Direct labor rate variance=(SR-AR)*AH=($13-$13.60)*2,600=-$1,560-U

d)Variable overhead efficiency variance=(SH-AH)*SR=(2,200-2,600)*$2=-$800-U

f)Variable overhead rate variance=(SR-AR)*AH=($2-$1.90)*2,600=$260-F

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