Vitex, Inc. manufactures a popular consumer product and it has provided the foll
ID: 2526823 • Letter: V
Question
Vitex, Inc. manufactures a popular consumer product and it has provided the following data excerpts from its standard cost system:
*Applied to Work in Process during the period.
The company's manufacturing overhead cost is applied to production on the basis of direct labor-hours. All of the materials purchased during the period were used in production. Work in process inventories are insignificant and can be ignored.
Required:
4. How many actual direct labor-hours were worked during the period?
5. What was the actual rate paid per direct labor-hour? (Round your answer to 2 decimal places.)
6. How much actual variable manufacturing overhead cost was incurred during the period?
Inputs (1) Standard Quantity or Hours (2)Standard
Price
or Rate Standard
Cost
(1) × (2) Direct materials 2.30 pounds $ 17.10 per pound $ 39.33 Direct labor 1.00 hours $ 15.90 per hour $ 15.90 Variable manufacturing overhead 1.00 hours $ 9.30 per hour $ 9.30 Total standard cost per unit $ 64.53
Explanation / Answer
4). Direct labour efficiency variance = (Std hrs for actual production - Actual hrs)*Std rate per hour
Std hrs for actual production = 318000 / 15.90 = 20000 hrs
Direct labour efficiency variance = (20000 - Actual hrs)*15.90 = 15900 U
20000 - Actual hrs = -15900/15.90
20000 - Actual hrs = -1000
Actual hrs worked = 21000 hrs
5). Direct labour rate variance =(std rate - Actual hrs) * Actual hrs
(15.90 - Actual rate ) *21000 hrs = 4200 U
15.90 - Actual rate = -0.2
Actual rate = 16.1 per hour
6). Variable overhead expenditure variance = Budgeted variable overhead for actual hours - Actual variable overhead
Budgeted variable overhead for actual hours = 21000 hrs * 9.3 = 195300
Variable overhead expenditure variance = 195300 - Actual variable overhead = 4400 F
Actual variable overhead = 195300 - 4400 = $190900
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