West and Jones Granite Corp uses a standard cost system for its single product.

Question

West and Jones Granite Corp uses a standard cost system for its single product. The following data are available: ACTUAL for the current year: Purchase of raw materials (5,200 sq ft at $11.80) $61,360 Raw materials used 4,800 sq ft Direct Labor costs (22,000 at $13.80) $303,600 Actual variable overhead cost $64,250 Units produced 5,820 units Standards per unit of product: Raw materials 1.0 sq ft at $10.70/sq ft Direct labor 3.8 hours at $13.50/hr Variable overhead $2.75 per direct labor hour Compute the following variances: 1. material variance (price and quantity) 2. labor variance (rate and efficiency) 3. variable overhead variance (spending and efficiency)

1- Using the attached problem, compute the material price variance.

3,750 U

5,720 U

6,600 U

10,914 F

2-

Using the attached problem, compute the material quantity variance.

3,750 U

5,720 U

6,600 U

10,914 F

3-

Using the attached problem, compute the labor rate variance.

3,750 U

5,720 U

6,600 U

10,914 F

4-

Using the attached problem, compute the labor efficiency variance.

319 F

1,566 F

3,750 U

6,600 U

5-

Using the attached problem, compute the total labor variance.

319 F

1,566 F

5,034 U

6,600 U

6-

Using the attached problem, compute the variable manufacturing overhead spending variance.

319 F

1,566 F

3,431 U

3,750 U

7-

Using the attached problem, compute the variable manufacturing overhead efficiency variance.

319 F

1,566 F

3,431 U

3,750 U

8-

Using the attached problem, compute the total variable manufacturing overhead variance.

319 F

1,566 F

3,431 U

3,750 U

3,750 U

5,720 U

6,600 U

10,914 F

Explanation / Answer

Answer for 1)

Material price variance:

(Std. Price-actual price)Actual quantity used

($10.7-$11.8)×5200 sq ft=$5720 u

Actual actual quantity must be 4800 sq ft but there is an option error and hence to get the answer 5200 sq ft is taken

Answer for 2)

(STD. Quantity for actual output-actual quantity)STD. Price

(5820 sq ft-4800sq ft)×$10.7=$10914F

Answer for 3)

Labour rate variance:

(STD rate- actual rate)Actual time used

($13.5-$13.8)22000 hours=$6600u

Answer for 4)

Labour efficiency rate:

(STD hours -Actual hours)STD rate

((5820sq ft×3.8 hours)-22000hours)$13.5=$1566 F

Answer for 5)

Total Labour Variance:

Labour rate variance+labour efficiency variance

=$6600 u+$1566F=$5034u

Answer for 6)

Variable manufacturing spending rate:

(STD rate- actual rate)×Actual hours

($2.75-($64250/22000 hours))×22000 hours=$3750U

Answer for 7)

Variable manufacturing overhead efficiency variance:

(STD. Hours -actual hours)×std rate

=((5820 sq ft×3.8 hours)-22000hours)×$2.75=$319 F

Answer for 8)

Total Manufacturing overhead variance:

Variable manufacturing spending variance+ variable manufacturing efficiency variance

=$3750u+$319F=$3431u

NOTE:Here std. Hours indicates std. Hours for actual output.

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