Galeazzi Corporation makes a product with the following standard costs: Standard
ID: 2509234 • Letter: G
Question
Galeazzi Corporation makes a product with the following standard costs:
Standard Quantity or Hours
Standard Price or Rate
Direct materials..........
3.1 pounds
$6.00 per pound
Direct labor................
0.8 hours
$18.00 per hour
Variable overhead......
0.8 hours
$6.00 per hour
In October the company produced 3,000 units using
8,380 pounds of the direct material and 2,610 direct labor-hours. During the month, the company purchased 9,500 pounds of the direct material at a total cost of $55,100. The actual direct labor cost for the month was $48,546 and the actual variable overhead cost was $16,965. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
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.
Standard Quantity or Hours
Standard Price or Rate
Direct materials..........
3.1 pounds
$6.00 per pound
Direct labor................
0.8 hours
$18.00 per hour
Variable overhead......
0.8 hours
$6.00 per hour
Explanation / Answer
Standard Cost: Particulars Qty Rate Amt Direct Material 3.1 6.00 18.60 Direct Labor 0.8 18.00 14.40 Variable OH 0.8 6.00 4.80 37.80 Units 3000 Standard Cost for Actual: Particulars Qty Rate Amt Direct Material 9300 6.00 55,800 Direct Labor 2400 18.00 43,200 Variable OH 2400 6.00 14,400 1,13,400 Actual Cost for Actual Production: Particulars Qty Rate Amt Qty Purchased Amt PU Cost Direct Material 8380 5.80 48,604 9500 55100 5.80 Direct Labor 2610 18.60 48,546 Variable OH 2610 6.50 16,965 1,14,115 A Material Price Variance: F/A Total Material (SP-AP)Actual Qty Consumed Variance (6-5.80)*8380 1676 F B Material Usage Variance: (SQ-AQ)SP (9300-8380)6 5520 F 7196 C Labor Price Variance: Total Labor (SP-AP)Actual Hours Variance (18-18.60)*2610 -1566 A D Labor Eff Variance: (SH-AH)SP (2400-2610)18 -3780 A -5346 E VOH Price Variance: Total VOH (SP-AP)Actual Hours Variance (6-6.50)*2610 -1305 A F VOH Eff Variance: (SH-AH)SP (2400-2610)6 -1260 F -2565
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