b w loc ses a base chemical into 11aste·Stanard cota Direct lobor 11,700 hrs, at

Question

b w loc ses a base chemical into 11aste·Stanard cota Direct lobor 11,700 hrs, at $25.00 based on 100% of normal of 15,000 direct labor brs cost, sa.0o Fixed cost, $10.00 $150,000 fixed cout Required Quentity variance ttet direct mater-out vanance b. Determine the es a postive e oewse the variat" fadev oveteed eentelatte venance, hed factory overteed vehne variance, end tetd fectary overhead coat arance. trter·favorable verance as a negative positive number nterang sgn and a Fixed fectory overhend volume variance

Explanation / Answer

A. Direct Material Variance

i. Price Variance :

(a)ACTUAL COST = ACTUAL QTY * ACTUAL PRICE = 118,500 * 3.25 = $385,125

(b)Standard Cost of Actual Quantity = ACTUAL QTY * STANDARD PRICE = 118,500 * 3.20 = $ 379,200

MATERIAL PRICE VARIANCE = $385,125(a) - $ 379,200(b) = $ 5,925

ii. Quantity Variance : (ACTULA QTY - STANDERD QTY) * STANDERD PRICE

(118,500 - 120,000) * 3.20 = - $4,800 & Variance Qty 1,500

iii. Total Material Cost Variance = (Standerd Qty * Standerd Cost) - (Actual Qty * Actual Cost)

(120,000 * 3.20) - (118,500 * 3.25) = - $ 1125

B. Direct Labour Cost Variance

i. DIRECT LAOUR RATE VARIANCE = (Actual Quantity x Actual Rate) - ( Actual Quantity x Standard Rate)

(11,700 hrs * $ 25) - (11,700 hrs * $ 24.40) = $292,500 - $ 285480 = $ 7020

ii. Direct Labour Time (Efficiency) Variance = (Actual Hours x Standard Rate) - (Standard Hours x Standard Rate)

(11,700 hrs * $ 24.40) - (12,000 hrs * $ 24.40) = - $ 7,320 In hrs 300 hrs

iii. Total Labour Cost Variance = (Standerd Qty * Standerd Cost) - (Actual Qty * Actual Cost)

(12,000 * $ 24.40) - (11,700 * $ 25) = $ 292,800 - $ 292,500 = $ 300

C. FACTORY OVERHEAD VARIANCE

i. Variable Factory Overhead Controllable Varicne = Actual Variable Factory Overhead - (Standerd Overhead Per unit * Actual unit)

Actual Variable Factory Overhead = $ 91,200

Standerd Overhead Per unit = $ 8

Actual Unit = 11,700 hrs

Variance = $ 91,200 - ($ 8 * 11,700 hrs) = - $ 2,400

ii. Fixed Overhead Volumn Variacne = (Actual hrs * Fixed Overhead Rate/hrs) - (Budgeted hrs * Fixed Overhead Rate/hrs)

(11,700 * $ 10) - (15,000 * $ 10) = 117,000 - 150,000 = -$ 33,000

iii. Total Factory Cost Variance = Standerd Overhead - Actual Overhead

Standard Overhead = Actual Hrs * Sta. Overhead / Unit = 11,700 hrs * (8 +10) = $ 210,600

Actual Overhead = (91 200 + 150,000) = $ 241,200

Variance = $ 210,600 - $ 241,200 = $30,600

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