The standards for one case of liquid weed killer are: During the week ended Augu
ID: 2505024 • Letter: T
Question
The standards for one case of liquid weed killer are:
During the week ended August 6, the following activity took place:
11,400 lbs. of raw material were purchased for inventory at a total cost of $70,680.
Calculate each of the following variances (Input all amounts as positive values. Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response):
The standards for one case of liquid weed killer are:
Explanation / Answer
(a) Price Variance for raw materials purchased
= (Standard Price - Actual price) x Actual Quantity Purchased
= (6 - 70680/11400) x 11400
= $2280 U
(b) Raw Material Usage Variance
= (Standard Quantity used - Actual Quantity used) x Standard Price
= (3800 x 3 - 11290) x 6
= $660 F
(c) Direct labour rate variance
= (Standard Rate - Actual Rate) x Actual Hours
=(12 - 12.25) x 6720
= $1680 U
(d) Direct labour efficiency variance
= (Standard Hour - Actual Hour) x Standard Rate
= (3800 x 1.8 - 6720) x 12
= $1440 F
(e) Variable O/H Spending variance
= Actual Machine Hours x Standard Rate - Actual Overhead
= 2390 x 3.5 - 8126
=$239 F
(f) Variable O/H Efficiency variance
= Standard Machine hours x Standard rate - Actual Machine Hours x Standard Rate
= (3800 x 0.6 x 3.5) - 2390 x 3.5
= $385 U
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