Saved Help Save & Ex Chee Koontz Company manufactures a number of products. The
ID: 2558103 • Letter: S
Question
Saved Help Save & Ex Chee Koontz Company manufactures a number of products. The standards relating to one of these products are shown below, alor actual cost data for May. Standard Cost per Direct materials Unit Unit Standard: 1.80 feet at $2.40 per foot Actual? 1.75 feet at $2.60 per foot s 4.32 Direct labors 4.55 Standard: 0.90 hours at $15.00 per hour Actual: 0.95 hours at $14.40 per hour 13.50 13.68 Variable overhead: Standard: 0.90 hours at $7.00 per hour Actual: 0.95 hours at $6.60 per hour 6.30 6.27 Total cost per unit Excess of actual cost over ?tandard cost per unit $24.12 24.50 when he saw this report and commented: This $0.38 excess cost is well within the percent limit management has set for acceptable variances. I's obvious that Actual production for the month was 13.500 units. Variable overhead cost is assigned to products on the basis of direct labor ho 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 $0.38 excess unit cost is traceable to each of the variances computed n n) above. 3. How much of the $0.38 excess unit cost is traceable to apparent inefficient use of labor time? Complete this question by entering your answers in the tabs belowExplanation / Answer
1.
Actual quantity of material for 13,500 units = 1.75 x 13,500 = 23,625 Feet
Materials price variance = Actual quantity x (Actual price – Standard price)
= 23,625 x ($ 2.60 - $ 2.40) = 23,625 x $ 0.20 = $ 4,725 U
Standard Quantity of material for 13,500 units = 1.80 x 13,500 = 24,300 Feet
Materials quantity variance = (Actual Quantity – Standard Quantity) x Standard Price
= (23,625 - 24,300) x $ 2.40 = - 675 x $ 2.40
= - $ 1,620 F
2.
Actual labor hours for 13,500 units = 0.95 x 13,500 = 12,825 Hr
Labor rate Variance = (Actual rate - Standard rate) × Actual hour
= ($ 14.40 - $ 15) x 12,825 = - $ 0. 60 x 12,825 = - $ 7,695 F
Standard labor hours for 13,500 units = 0.9 x 13,500 = 12,150 Hr
Labor efficiency Variance = (Actual hours - Standard hours) x Standard rate
= $ 15 x (12,825 – 12,150) = $ 15 x 675 = $ 10,125 U
3.
Actual hours for 13,500 units = 0.95 x 13,500 = 12,825 Hr
Variable overhead rate variance = Actual hours x (Actual rate – Standard rate)
= 12,825 x ($ 6.6 - $ 7) = 12,825 x (– $ 0.4) = - $ 5,130 F
Standard hours for 13,500 units = 0.9 x 13,500 = 12,150 Hr
Variable overhead efficiency variance = Standard overhead rate x (Actual hours - Standard hours)
= $ 7 x (12,825 – 12,150) = $ 7 x 675 = $ 4,725 U
1a
Materials price variance
$4,725
U
Materials quantity variance
$1,620
F
1b
Labor rate Variance
$7,695
F
Labor efficiency Variance
$10,125
U
1c
Variable overhead rate variance
$5,130
F
Variable overhead efficiency variance
$4,725
U
2.
Variance per unit = Total variance /No. of units produced
Material
Price variance
$0.35
U
Quantity variance
$0.12
F
$0.23
U
Labor
Rate variance
$0.57
F
Efficiency variance
$0.75
U
$0.18
U
Variable overhead
Rate variance
$0.38
F
Efficiency variance
$0.35
U
$0.03
F
Excess of actual over standard cost per unit
$0.38
U
***** Answered for four sub parts.
1a
Materials price variance
$4,725
U
Materials quantity variance
$1,620
F
1b
Labor rate Variance
$7,695
F
Labor efficiency Variance
$10,125
U
1c
Variable overhead rate variance
$5,130
F
Variable overhead efficiency variance
$4,725
U
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