SOMEONE PLEASE HELP I NEED THEM ALL CORRECT. Direct Materials, Direct Labor, and
ID: 2487030 • Letter: S
Question
SOMEONE PLEASE HELP I NEED THEM ALL CORRECT.
Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis
Eastern Polymers, Inc., processes a base chemical into plastic. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 5,200 units of product were as follows:
Required:
a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
b. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
c. Determine variable factory overhead controllable variance, the fixed factory overhead volume variance, and total factory overhead cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
Eastern Polymers, Inc., processes a base chemical into plastic. Standard costs and actual costs incurred for the manufacture of 5,200 units of product were as follows: Standard Costs Direct materials Direct labor Factory overhead Actual Costs 6,700 lbs. at $5.60 1,330 hrs. at $18.20 6,800 lbs. at $5.80 1,300 hrs. at $17.80 Rates per direct labor hr., based on 100% of normal capacity of 1,360 direct labor hrs.: Variable cost, $3.70 $4,760 variable cost Fixed cost, $5.80 $7,888 fixed cost Each unit requires 0.25 hour of direct labor. Required: a. Determine the direct materials price variance, direct materials quantity variance, and total c variance as a negative number using a minus sign and an unfavorable variance as a positive numb Price variance Quantity variance Favorable * Favorable ,Explanation / Answer
a) Material Price variance = ( Actual price - standard price ) * actual quantity = (5.60 -5.80) * 6700 =0.2 * 6700 = 1340 favourale Material quantity variance = ( standard quantity - actual quantity) * standard price = (6800 - 6700) * 5.80 = 100 * 5.80 = 580 favourable Total material variance = material price variance + material quantity variance = 1340 favourable + 580 unfavourable = 1920 favourable b) Labor price variance = ( Actual rate -standard rate ) * actual hours = (18 - 17.8) * 1330 =0.20* 1330 = 266 unfavourale Labor quantity variance = ( standard hours - actual hours) * standard rate = ( 1300 - 1330) * 17.8 = 30 * 17.8 = 534 unfavourable Total labor variance = labor price variance + labor quantity variance = 266 unfavourable + 534 unfavourable = 800 unfavourable c) variable controllable variance = Actual variable overhead expense - ( budgeted overhead per unit * standard number of units) = 4760 - ( 3.70 * 0.25 * 5200) = 4760 - 4810 = 50 favourable fixed overhead volume variance = ( actual activity - standard activity) * FOAR = ( 1330 - 1300) * 5.80 = 30 * 5.80 = 174 unfavourable Total factory overhead cost variance = variable controllable variance + fixed overhead volume variance = 50 favourable + 174 unfavourable = 124 unfavourable
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