Landers Company manufactures a number of products. The standards relating to one
ID: 2473688 • 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
1a Materials price and quantity variances Direct materials quantity variance =(AQ X SP)- (SQ X SP) or say (1.75 X 1.60) - (1.60-1.80) 3.00 $ F Material price variance= AQ X (AP-SP) or say 1.75 (2.10-1.60) 0.875 $ F AQ= Actual quantity 1.75 AP= Actual Price $ 2.1 SP= Standard Price $ 1.6 SQ= Standard Quantity 1.8 1b Labor rate and efficiency variances Direct Labor Rate Variance =( AH x AR)- (AH x SR) or say (.95 X 18.5)- (.95X 19) -0.475 $ U Direct Labor Effciency Variance= ( AH x SR) - (SH x SR) or say (.95 x 19) - ( .9 x 19) 0.95 $ F Actual Hours 0.95 Actual Rate $ 18.5 Standard Hours 0.90 Standatd Rate $ 19.00 1c Variable overhead rate and efficiency variances Variable Overhead Rate Variance: ( AH x AR) - (AH x SR) or say ( .95 x 5.60) - ( .95 x 6) -0.38 $ U Varriable Ovrhead effeciency varriance = (SH-AH) x SR or say (.90- .95) x 6 -0.3 $ F Actual hours 0.95 Actual varriable overhead Rate 5.60 Standard Hours 0.90 Standard Variable Overhead Rate per hour 6.00 2 How much of the $1.19 excess unit cost is traceable to each of the variances Material price variance 0.875 Direct Labor Effciency Variance 0.95 Varriable Ovrhead effeciency varriance -0.3 3 How much of the $1.19 excess unit cost is traceable to apparent inefficient use of labor time? Direct Labor Effciency Variance 0.95
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