Kowaleski Corporation makes a product with the following standard costs Standard

Question

Kowaleski Corporation makes a product with the following standard costs Standard Quantity Standard Price or Rate Direct materials Direct labor Variable overhead or Hours 5.8 grams 7.00 per gram 0.5 hours $14.00 per hour 0.5 hours 2.00 per hour In June the company produced 5,100 units using 30,830 grams of the direct material and 2,670 direct labor hours. During the month the company purchased 25,000 grams of the direct material at a price of $6.80 per gram. The actual direct labor rate was $14.60 per hour and the actual variable overhead rate was $1.90 per hour. The materials price variance is computed when materials are purchased. Variable overhead is applied on the basis of direct labor-hours Required Compute the following variances for raw materials, direct labor, and variable overhead, assuming that the price variance for materials is recognized at point of purchase: (Input all amounts as positive values. Do not round intermediate calculations. Leave no cells blank be certain to enter "O" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.) Direct materials quantity variance Direct materials price variance Direct labor efficiency variance Direct labor rate variance Variable overhead efficiency variance Variable overhead rate variance

Explanation / Answer

Direct material quantity variance = (5100*5.8-30830)*7 = 8750 U

Direct material price varianc e= (7-6.8)*25000 = 5000 F

Direct labour efficiency variance = (5100*.50-2670)*14 = 1680 U

Direct labour rate variance = (14-14.60)*2670 = 1602 U

Variable overhead efficiency variance = (5100*.50-2670)*2 = 240 U

Variable overhead rate variance = (2-1.90)*2670 = 267 F

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