Silmon Corporation makes a product with the following standard costs: Standard Q

Question

Silmon Corporation makes a product with the following standard costs: Standard Quantity Standard Price or Rate Direct materials Direct labor Variable overhead or Hours 4.9 grams 7.00 per gram 0.6 hours 14.00 per hour 0.6 hours 4.00 per hour In June the company produced 4,200 units using 21,830 grams of the direct material and 2,580 direct labor- hours. During the month the company purchased 24,100 grams of the direct material at a price of $6.80 per gram. The actual direct labor rate was $14.60 per hour and the actual variable overhead rate was $3.90 per hour. The materials price variance is computed when materials are purchased. Variable overhead is applied on the basis of direct labor-hours. Required: Compute the following variances for raw materials, direct labor, and variable overhead, assuming that the price variance for materials is recognized at point of purchase: (Input all amounts as positive values. Do not round intermediate caiculations. Leave no cells blank - be certain to enter "o" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.) a. Direct materials quantity variance b. Direct materials price variance c. Direct labor efficiency variance d. Direct labor rate variance (Click to select) (Click to select) (Click to select) (Click to select) Click to select) (Click to select) Variable overhead efficiency variance Variable overhead rate variance f.

Explanation / Answer

Direct materials price variance = 24100*(6.8-7)= 4820 Favorable Direct materials quantity variance = 7*(21830-4200*4.9)= 8750 Unfavorable Direct labor efficiency variance = 14*(2580-4200*0.6)= 840 Unfavorable Direct labor rate variance = 2580*(14.6-14)= 1548 Unfavorable Variable overhead efficiency variance = 4*(2580-4200*0.6)= 240 Unfavorable Variable overhead rate variance = 2580*(3.9-4)= 258 Favorable

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