The following data is given for the Nalika Company: Budgeted production 26,000 u
ID: 2472712 • Letter: T
Question
The following data is given for the Nalika Company:
Budgeted production
26,000 units
Actual production
27,500 units
Materials:
Standard price per ounce
$6.50
Standard ounces per completed unit
8
Actual ounces purchased and used in production
228,000
Actual price paid for materials
$1,504,800
Labor:
Standard hourly labor rate
$22 per hour
Standard hours allowed per completed unit
6.6
Actual labor hours worked
183,000
Actual total labor costs
$4,020,000
Overhead:
Actual and budgeted fixed overhead
$1,029,600
Standard variable overhead rate
$24.50 per standard labor hour
Actual variable overhead costs
$4,520,000
Overhead is applied on standard labor hours.
1. The direct labor rate variance is:
a.
6,000U
b.
6,000F
c.
33,000F
d.
33,000U
2. The direct labor time variance is:
a.
6,000F
b.
6,000U
c.
33,000U
d.
33,000F
The Rupa Corporation had 8,200 actual direct labor hours at an actual rate of $12.40 per hour. Original production had been budgeted for 1,100 units, but only 1,000 units were actually produced. Labor standards were 7.6 hours per completed unit at a standard rate of $13.00 per hour.
3. Compute the labor rate variance.
a.
4,920U
b.
4,920F
c.
4,560U
d.
4,560U
4. Compute the labor time variance.
a.
9,880F
b.
9,880U
c.
7,800U
d.
7,800F
Standard
Actual
Material Cost Per Yard
$2.00
$2.10
Standard Yards per Unit
4.5 yards
4.75 yards
Units of Production
9,500
5. Calculate the Total Direct Materials cost variance using the above information:
a.
$9,262.50 Unfavorable
b.
$9,262.50 Favorable
c.
$3,780.00 Unfavorable
d.
$3,562.50 Favorable
6. Calculate the Direct Materials Price variance using the above information:
a.
$1,795.50 Favorable
b.
$378.00 Favorable
c.
$4,512.50 Unfavorable
d.
$378.00 Unfavorable
7. Calculate the Direct Materials Quantity variance using the above information:
a.
$4,512.50 Unfavorable
b.
$4,512.50 Favorable
c.
$4,750 Unfavorable
d.
$4,750 Favorable
Standard
Actual
Rate
$12.00
$12.25
Hours
18,500
17,955
Units of Production
9,450
8. Calculate the Total Direct Labor Variance using the above information
a.
$2,051.25 Favorable
b.
$2,051.25 Unfavorable
c.
$2,362.50 Unfavorable
d.
$2,362.50 Favorable
9. Calculate the Direct Labor Time Variance using the above information
a.
$2,362.50 Favorable
b.
$2,362,50 Unfavorable
c.
$6,540.00 Favorable
d.
$6,540.00 Unfavorable
10. Calculate the Direct Labor Rate Variance using the above information
a.
$4,488.75 Unfavorable
b.
$6,851.25 Favorable
c.
$4,488.75 Favorable
d.
$6,851.25 Unfavorable
11. Which of the following is not a reason for a direct materials quantity variance?
a.
Malfunctioning equipment
b.
Purchasing of inferior raw materials
c.
Increased material cost per unit
d.
Spoilage of materials
Budgeted production
26,000 units
Actual production
27,500 units
Materials:
Standard price per ounce
$6.50
Standard ounces per completed unit
8
Actual ounces purchased and used in production
228,000
Actual price paid for materials
$1,504,800
Labor:
Standard hourly labor rate
$22 per hour
Standard hours allowed per completed unit
6.6
Actual labor hours worked
183,000
Actual total labor costs
$4,020,000
Overhead:
Actual and budgeted fixed overhead
$1,029,600
Standard variable overhead rate
$24.50 per standard labor hour
Actual variable overhead costs
$4,520,000
Explanation / Answer
1) Direct Labor rate variance = Actual Hours X ( Standard rate -Actual rate)
= 183,000 X (22 - (4,020,000/183,000)) = 6,000 F
So Correct option is b. 6,000 F
2) Direct Labor time variance = standard rate X ( Standard hours - Actual hours)
= 22 X ( ( 27,500 X 6.6) - 183,000 )
= 33,000 U
So correct answer is C. 33,000 U
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