Case 10-17 Working Backwards from Variance Data [LO10-1, LO10-2, LO10-3] Vitex,

Question

Case 10-17 Working Backwards from Variance Data [LO10-1, LO10-2, LO10-3]

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:

1. How many units were produced last period?

2. How many pounds of direct material were purchased and used in production?

3. What was the actual cost per pound of material? (Round your answer to 2 decimal places.)

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 $ 16.20 per pound $ 37.26 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 $ 62.46

Explanation / Answer

1) Units produced last period = 707940/37.26 = 19000 units

2) Material effiiciency variance = (Standard quantity-actual quantity) standard price

-32400 = (43700-X)*16.20

-32400 = 707940-16.20X =

Actual quantity purchase and used = 45700 pounds

3) Material price variance = (Standard price-actual price)actual quantity

13253 = (16.20*45700-45700X)

13253 = 740340-45700X

Actual cost per pound = 15.91 per pound

4) Labour efficiency variance = (Standard hour-actual hour)Standard price

-15900 = (19000*15.90-15.90X)

-15900 = 302100-15.90X

Actual hour = 20000 hour

5) Labour rate variance = (Standard rate-actual rate) actual hour

-4000 = (15.90*2000-X*20000)

-4000 = 318000-20000X

X (actual rate) = 16.10 per hour

6) Variable overhead effieicny variance = (19000-20000)*9.30 = 9300 U

Actual variable overhead = 181600

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