I need to be able to understand for 1 - 4, hw to calculate so that I can appropr

Question

I need to be able to understand for 1 - 4, hw to calculate so that I can appropriately use cell references please.

Gourmet, Inc. produces containers of frozen food. During October the company had the following actual production and costs Actual Containers produced in October Variable Overhead Fixed Overhead Direct Labor cost Actual material purchased Actual Material pounds used 725 $5,500 $14,000 $75,600 Which is $33,000 Which is 4,000 Direct labor hours 15,000 pounds 14,900 pounds Overhead is budgeted and applied using direct-labor hours. Standard cost and annual budget information are as follows Standard cost per container 5 hours Direct Labor Direct Material $18 $2 $90 $40 at 20 pounds at Direct labor 5 hours Direct labor 5 hours Variable overhead at $1.50 $7.50 $3 Fixed Overhead Total at $152.50 Budgeted Monthly Fixed Overhead $12,500 Required: Make sure you do not forget to label the variances U or F. You need to show your work either by cell reference or showing your calculation to the side 1. Calculate the direct materials price and quantity variance Materials price variance Materials Quantity variance 2. Calculate the direct labor rate and efficiency variances Labor rate variance Labor Efficiency variance 3. Calculate the variable overhead spending and efficiency variances Variable overhead spending variance Variable overhead efficiency variance 4. Calculate the fixed overhead budget variance Fixed overhead budget variance

Explanation / Answer

1 Material Price Variance = Actual Qty* Standard Price - Actual Qty*Actual Price = 14900*$2 - 14900*2.2 = $2980(U)

(actual price= 33000/15000 = 2.2)

2. Material Qty Variance = SQ*SP - AQ*AP = (725*20)*2 - 14900*2.2 = $3780 (U)

3. Labour rate variance = AH*SR - AH*AR = 4000*18 -4000*18.90 = $3600(U)

4. labour efficiency variance = SH*SR - AH*SR = 725units*5hrs pu*18 - 4000*18 = $6750(U)

5. variable overhead spending variance = AH*SR - AH*AR = 4000*1.5 - 4000*1.375 = $500(F)

AR= $5500/4000hrs = 1.375 ph

6. variable overhead efficiency variance = SH*SR - AH*AR = 725*5*1.5 - 4000*1.375 = $62.5(U)

7. fixed overhead budget variance = Standard or absorbed FOH - Actual FOH = 4000*3 - $14000 = $2000(U)

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