Landers Company manufactures a number of products. The standards relating to one
ID: 2473686 • Letter: L
Question
Landers Company manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May.
The production superintendent was pleased when he saw this report and commented: "This $1.19 excess cost is well within the 5 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 11,500 units. Variable overhead cost is assigned to products on the basis of direct labor-hours. There were no beginning or ending inventories of materials.
Materials price and quantity variances.(Round your "price per foot" answers to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)
Labor rate and efficiency variances.(Round your "rate per hour" answers to 2 decimal places.Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance))
Variable overhead rate and efficiency variances. (Round your "rate per hour" answers to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance))
How much of the $1.19 excess unit cost is traceable to each of the variances computed in (1) above.(Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Round your answers to 2 decimal places.)
How much of the $1.19 excess unit cost is traceable to apparent inefficient use of labor time? (Input all values as positive amounts. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Do not round intermediate calculations. Round your final answers to 2 decimal places.)
Landers Company manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May.
Explanation / Answer
1-a)
Material Price Variance = (standard price - actual price) actual usage
= (1.60 - 2.10) 20125 = $10062.50 UF
Material Quantity Variance = (standard quantity for actual production - actual usage) standard price
= (20700 - 20125) 1.60 = $920 F
1-b)
Labor Rate Variance = (19 - 18.50) 10925 = $5462.50 F
Labor Efficiency Variance = (10350 - 109250 19 = $10925 UF
1-c)
Variance Overhead Rate Variance = (6 - 5.60) 10925 = $4370 F
Variance Overhead Efficiency Variance = (10350 - 10925) 6 = $3450 UF
2)
The whole difference of $1.19 is traced :
Material = (10062.50 - 920) / 11500 = $0.795 out of $1.19
Labor = (10925 - 5462.50) / 11500 = $0.475 out of $1.19
Variable Overhead = (3450 -4370) / 11500 = -$0.08 out of $1.19
Total of all variance = (0.795 + 0.475 - 0.08) = 1.19 (UF)
3) the $1.19 excess unit cost is traceable to apparent inefficient use of labor time
= $10925 / 11500 = $0.95 (UF)out of $1.15 excess unit cost.
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