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Sharp Manufachure X tion.com/flow/connect.html ure https: hitectures- uNF mywings UNF Library Printing er 10 Homework Assignment Miami Heat Live Stre.. Saved Halp Sta Cost per ct Cost per Direct materials 2.88 Standard: 1.80 feet at $1.60 per foot Actual: 1.75 feet at $2.00 per foot 3.50 Direct labori Standard: 0.90 hours at $18.00 per hour 16.20 Actual: 0.95 hours at $17.40 per hour 16.53 Variable overhead: ok Standard: 0.90 hours at $6.00 per hour 5.40 5.32 $25.35 Actual: 0.95 hours at $5.60 per hour nt Total cost per unit $24.48 Excess of actual cost over standard cost per unit $0.87 The production superintendent was pleased when he saw this report and commented: "This $0.87 excess cost is well within the 5 percent limit management has set for acceptable variances, It's obvious that there's not much to worry about with this product. Actual production for the month was 11,500 units. Variable overhead cost is assigned to products on the basis of direct labor-hours There were no beginning or ending inventories of materials. Required: 1. Compute the following variances for May a. Materials price and quantity variances. b. Labor rate and efficiency variances. c. Variable overhead rate and efficiency variances. 2. How much of the $0.87 excess unit cost is traceable to each of the variances computed in () above. 3. How much of the $0.87 excess unit cost is traceable to apparent inefficient use of labor time?

Explanation / Answer

Material Standard quanity*Standard price Actual quanity*Standard Price Actual Quantity*Actual price =11500*1.8*1.6 =11500*1.75*1.6 =11500*1.75*2 33120 32200 40250 Material Quantity Variance Material Price Variance =33120-32200 =32200-40250 920 Favourable -8050 Unfavourable Labor Standard quanity*Standard rate Actual quanity*Standard rate Actual Quantity*Actual rate =11500*0.90*18 186300 =11500*0.95*18 196650 =11500*0.95*17.4 190095 Labor efficiency Variance Labor Rate variance =186300-196650 =196650-190095 -10350 Unfavourable 6555 Favourable Variable Overhead Actual Variable OH Cost Flexible Budget Standard Cost(VOH applied) Actual Quantity*Actual rate Actual Quantity*Standard rate Standard Quantity*Standard rate =11500*0.95*5.6 =11500*0.95*6 =11500*0.90*6 61180 65550 62100 VOH Spending variance VOH Efficiency Variance =65550-61180 =62100-65550 4370 Favourable -3450 Unfavourable Requirement 1a Material price Variance 8050 Unfavourable Materials quanity variance 920 Favourable 1b Labor rate variance 6555 Favourable Labor efficiency variance 10350 Unfavourable 1c Variable Overhead rate variance 4370 Favourable Variable overhead efficiency variance 3450 Unfavourable Requirement Materials Total variance Per unit Total Per unit Price Variance -8050 -0.7 Quantity Variance 920 0.08 -0.62 labor Rate Variance 6555 0.57 Efficiency Variance -10350 -0.9 -0.33 Variable Overhead Rate Variance 4370 0.38 Efficiency Variance -3450 -0.3 0.08 Excess of actual over standard cost per unit -0.87 Requirement Excess of actual over standard cost per unit -0.87 Less : portion attributable to labor efficiency Labor efficiency variance -0.9 Variable Overhead efficiency variance -0.3 -1.2 Portion due to other variance 0.33

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