Koontz Company manufactures a number of products. The standards relating to one

Question

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 ni Actual Cost per ni Direct materials $7.60 Standard: 1.90 feet at $4.00 per foot Actual: 1.85 feet at $4.40 per foot $ 8.14 Direct labor 17.60 Standard: 1.10 hours at $16.00 per hour Actual: 1.15 hours at $15.40 per hour Variable overhead Standard: 1.10 hours at $9.00 per hour Actual: 1.15 hours at $8.60 per hour 9.90 9.89 $35.74 0.64 Total cost per unit $35.10 Excess of actual cost over standard cost per unit The production superintendent was pleased when he saw this report and commented: "This $0.64 excess cost is well within the 4 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 17,500 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

1 a. Materials price and quantity variances:

b. Labor rate and efficiency variances:

c. Variable overhead rate and efficiency variances:

2.

3.

Materials price variance $ 4.00 - $ 4.40 x 32,375 = 12,950 Unfavorable Materials quantity variance 33,250 - 32,375 x $ 4.00 = 3,500 Favorable

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