Silmon Corporation makes a product with the following standard costs: In June th
ID: 2472395 • Letter: S
Question
Silmon Corporation makes a product with the following standard costs:
In June the company produced 4,800 units using 27,650 grams of the direct material and 2,640 direct labor-hours. During the month the company purchased 24,700 grams of the direct material at a price of $6.80 per gram. The actual direct labor rate was $14.60 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:
Standard Quantityor Hours Standard Price
or Rate Direct materials 5.5 grams $ 7.00 per gram Direct labor 0.5 hours $ 14.00 per hour Variable overhead 0.5 hours $ 2.00 per hour
In June the company produced 4,800 units using 27,650 grams of the direct material and 2,640 direct labor-hours. During the month the company purchased 24,700 grams of the direct material at a price of $6.80 per gram. The actual direct labor rate was $14.60 per hour and the actual variable overhead rate was $1.90 per hour. The materials price variance is computed when materials are purchased. Variable overhead is applied on the basis of direct labor-hours.
Required:Compute the following variances for raw materials, direct labor, and variable overhead, assuming that the price variance for materials is recognized at point of purchase: (Input all amounts as positive values. Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)
a. Direct materials quantity variance $ b. Direct materials price variance $ c. Direct labor efficiency variance $ d. Direct labor rate variance $ e. Variable overhead efficiency variance $ f. Variable overhead rate variance $Explanation / Answer
Answer:
a Direct material Quantity variance=(SQ-AQ)*SR
=((4800*5.5)-27650)*$7 per gram
=$8750 U
b. Direct material Price variance=(SP-AP)*AQ
=($7-6.80)*24700
=$4940 F
c. Direct labor efficiency variance=(SH-AH)*SR
=((4800*0.5)-2640)*14
=$3360 U
d. Direct labor rate variance=(SR-AR)*AH
=($14-14.60)*2640
=$1584 U
e. Variable overhead efficiency variance=(SH-AH)*SR
=((4800*0.5)-2640)*2
=$480 U
f. Variable overhead rate variance=(SR-AR)*AH
=($2-1.9)*2640
=$264 F
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