Genuine Spice Inc. began operations on January 1, 2014. The company produces a h
ID: 2498248 • Letter: G
Question
Genuine Spice Inc. began operations on January 1, 2014. The company produces a hand and body lotion in an eight-ounce bottle called Eternal Beauty. The lotion is sold wholesale in 12-bottle cases for $100 per case. There is a selling commission of $20 per case. The January direct materials, direct labor, and factory overhead costs are as follows:
During September of the current year, the controller was asked to perform variance analyses for August. The January operating data provided the standard prices, rates, times, and quantities per case. There were 1,500 actual cases produced during August, which was 250 more cases than planned at the beginning of the month. Actual data for August were as follows:
Determine and interpret the direct materials price and quantity variances for the three materials. Enter the costs in dollars and cents (carried to three decimal places when required). Enter all amounts as positive numbers.
Enter the standard price to two decimal places.
11. Determine and interpret the direct labor rate and time variances for the two departments. Round hours to the nearest hour. Enter the costs in dollars and cents. Enter all amounts as positive numbers.
12. Determine and interpret the factory overhead controllable variance. Enter all amounts as positive numbers.
13. Determine and interpret the factory overhead volume variance. When determining the fixed factory overhead rate, round your answer to two decimal places (and use that rounded rate when calculating factory overhead volume variance). Enter all amounts as positive numbers.
Direct Materials Price Variance: Cream Base Natural Oils Bottles Actual price $ $ $ Standard price Difference $ $ $ Actual quantity (units) X ozs. X ozs. X btls. Direct materials price variance $ $ $ Indicate if favorable or unfavorable SelectFavorableUnfavorableItem 16 SelectFavorableUnfavorableItem 17 SelectFavorableUnfavorableItem 18Explanation / Answer
Direct Materials Price Variance: Cream Base Natural Oils Bottles Actual price 0.02 0.3 0.5 Standard price 0.016 0.32 0.42 Difference 0.004 -0.02 0.08 Actual quantity (units) : 1500*(102; 31;12.5) 153000 ozs. 46500 ozs. 18750 btls. Direct materials price variance 612 -930 1500 Indicate if favorable or unfavorable Unfavorable Favorable Unfavorable Direct Materials Quantity Variance: Cream Base Natural Oils Bottles Actual quantity: 1500*(102; 31;12.5) 153000 ozs. 46500 ozs. 18750 btls. Standard quantity : 1500*(100; 30; 12) 150000 45000 18000 Difference 3000 ozs. 1500 ozs. 750 btls. Standard price 0.016 0.32 0.42 Direct materials quantity variance 48 480 315 Indicate if favorable or unfavorable Unfavorable Unfavorable Unfavorable Direct Labor Rate Variance: Mixing Department Filling Department Actual rate 18.2 14 Standard rate 18 14.4 Difference 0.2 -0.4 Actual time (hours) : 1500*(19.50/60) ; 1500*(5.60/60) 487.5 140 Direct labor rate variance 97.5 -56 Indicate if favorable or unfavorable Unfavorable Favorable Direct Labor Time Variance: Mixing Department Filling Department Actual time (hours) : 1500*(19.50/60) ; 1500*(5.60/60) 487.5 140 Standard time (hours) : 1500*(20/60) ; 1500*(5/60) 500 125 Difference -12.5 15 Standard rate 18 14.4 Direct labor time variance -225 216 Indicate if favorable or unfavorable Favorable Unfavorable
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