Kowaleski Corporation makes a product with the following standard costs: direct

Question

Kowaleski Corporation makes a product with the following standard costs:

direct materials.....standard quality or hours 2.8kilos.....standard price or rate $4.00 per kilo.

directly labor. ...standard quality or hours 0.1hours .....standard price or rate $21.00 per hours.

variable overhead....standard quality or hours 0.1hours .....standard price or rate $4.00 per hours.

In June the company produced 9,100 units using 27,010 kilos of the direct material and 930 direct labor-hours. During the month the company purchased 30,600 kilos of the direct material at a price of $3.70 per kilo. The actual direct labor rate was $19.90 per hour and the actual variable overhead rate was $4.20 per hour. The materials price variance is computed when materials are purchased. Variable overhead is applied on the basis of direct labor-hours.
Required
a. Compute the materials quantity variance.
b. Compute the materials price variance.
c. Compute the labor efficiency variance.
d. Compute the labor rate variance.
e. Compute the variable overhead efficiency variance.
f. Compute the variable overhead rate variance.

Kowaleski Crepoeation makes a prodact with the following sandard coss anded Price or Rae D 1 houns I superial and 930 dirot lb In June the coreporry prodaced 9,100 units using 21,030 kiks of dhe diret During the mosth the conspeny purchased 30.600 klos of the diect nuterial a pece of 53 7U perkil ctual direct labor rate wan $19.90 per hoor and toe actaal variabke overhead oc wa 54.20 per bour naterials price veiance is conputed wa tEaterials are parchaied. Vaisbile ovechead is applial on t

Explanation / Answer

a. Material Quantity Variance = (Actual Quantity - Standard Quantity) x Standard cost per unit

Actual Quantity = 27,010 Standard Quantity = 9,100 x 2.8 = 25,480, Standard cost per unit = $4

Material Quantity Variance = (27,010 - 25,480) x 4 = $6,120 Unfavorable

b. Material Price Variance = (Standard Price - Actual Price) x Actual Quantity

Standard Price = $4, Actual Price = $3.70, Actual Quantity = 30,600

Material Price Variance = (4 - 3.70) x 30,600 = $9,180 favorable

c. Labor Efficiency Variance = (Standard Hour - Actual Hour) x Standard Rate

Standard Hour = 9,100 x 0.1 = 910 Hours, Actual Hours =930, Standard Rate = $21

Labor Efficiency Variance = (910 - 930) x 21 = $420 Unfavorable

d. Labor Rate Variance = (Standard Rate- Actual Rate) x Actual Hour

Standard Rate = $21, Actual Rate = $19.90, Actual Hours = 930

Labor Rate Variance = (21 - 19.90) x 930 = $1,023 Favorable

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