The following data were drawn from the records of Zachary Corporation Planned vo

Question

The following data were drawn from the records of Zachary Corporation Planned volume for year (static budget) Standard direct materials cost per unit Standard direct labor cost per unit Total expected fixed overhead costs Actual volume for the year (flexible budget) Actual direct materials cost per unit Actual direct labor cost per unit Total actual fixed overhead costs 5,000 units 4.10 pounds $1.20 per pound 2.60 hours $4.80 per hour $25,000 5,500 units 3.50 pounds $1.60 per pound 2.80 hours $4.20 per hour $20,600 Required a. Prepare a materials variance information table showing the standard price, the actual price, the standard quantity, and the actual quantity b. Calculate the materials price and usage variances. Indicate whether the variances are favorable (F) or unfavorable (U) c. Prepare a labor variance information table showing the standard price, the actual price, the standard hours, and the actual hours d. Calculate the labor price and usage variances. Indicate whether the variances are favorable (F) or unfavorable (U) e. Calculate the predetermined overhead rate, assuming that Zachary uses the number of units as the allocation base f. Calculate the fixed cost spending variance. Indicate whether the variance is favorable (F) or unfavorable (U) g. Calculate the fixed cost volume variance. Indicate whether the variance is favorable (F) or unfavorable (U). Complete this question by entering your answers in the tabs below

Explanation / Answer

Required a

i) Standard price - 4.1 Pound and 4.92 $

ii) Actual Price - 3.5 Pound and 5.6$

iii) Standard Quantity flexible benefit - 5000 Quantity

iv) Actual quantity used - 5,500 Quantity

Required b

Material price variance - (Actual price - Standard price) x Actual quantity used = Material price variance

=(5.6-4.92)*5500 = 3,740 (F)

Material Usage Variance - [Actual Quantity - Standard Quantity] x Standard Price

(5500-5000)*4.92 = 2,460 (F)

c) Labour variance

i) Standard Price - 4.8 Per hour

ii) Actual Price - 4.2 per hour

iii) Standard Hour - 2.6 hour

iv) actual hour - 2.8 hour

d)

Labour Price Variance = Actual Cost - Standard Cost of the Actual Hours

= (4.2*2.8)-(2.8*4.8)

=1.68 (U)

Labour Usage Variance - Actual Hours x Standard Rate - Standard Hours x Standard Rate

= (2.8*4.8)-(2.6*4.8)

=0.96 (F)

e) Predetermined overhead rate

Predetermined overhead rate = Estimated manufacturing overhead cost/Estimated total units in the allocation base

=25000/5000

=5

f)Fixed cost spending Variance = 20600-25000 = 4,400 (F)

g) Fixed Overhead Volume Variance = (Actual Activity – Normal Activity) × Fixed Overhead Application Rate

=(5500-5000)*5

=2500 (F)

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