Variances Costs Total Standard Cost Price Quantity LINK TO TEXT LINK TO TEXT LIN
ID: 2478055 • Letter: V
Question
Variances
Costs
Total Standard Cost
Price
Quantity
LINK TO TEXT
LINK TO TEXT
LINK TO TEXT
LINK TO TEXT
You have been given the following information about the production of Horatio Co., and are asked to provide the plant manager with information for a meeting with the vice president of operations.Standard Cost Card Direct materials (5 pounds at $3 per pound) $15.00 Direct labor (0.8 hours at $7) 5.60 Variable overhead (0.8 hours at $4 per hour) 3.20 Fixed overhead (0.8 hours at $8 per hour) 6.40 $30.20
The following is a variance report for the most recent period of operations.
Variances
Costs
Total Standard Cost
Price
Quantity
Direct materials $407,200 $7,985 F $9,420 U Direct labor 183,900 5,550 U 7,460 UExplanation / Answer
1.How many units were produced during the period?
Taking Direct Material as basis
No of units produced = $407,200 / $15 = 27,147 units
2.How many pounds of raw material were purchased and used during the period?
Quantity Variance = ( AQ- SQ) *SP
($9420) =(AQ- 27,147 units*5 Pounds ) * $3
AQ = 138,875 pounds
3. What was the actual cost per pound of raw materials?
Material price variance = (AP-SP) *AQ
$7985 =(AP-$3) *138,875 pounds
AP = $3.06 per pound
4.How many actual direct labor hours were worked during the period?
labour quantity variance = (AQ-SQ) *SP
($7460) = (AQ- 27,147*0.8) *$7
AQ = 20,652 HOURS
5.What was the actual rate paid per direct labor hour?
Labour price variance = (AP-SP) *AQ
($5550) = (AP- $7) *20,652 HOURS
AP = $ 6.73 per hour
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