Kropf Inc. has provided the following data concerning one of the products in its
ID: 2580116 • Letter: K
Question
Kropf Inc. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours.
7.4
The company has reported the following actual results for the product for September:
Required:
a. Compute the materials price variance for September.
b. Compute the materials quantity variance for September.
c. Compute the labor rate variance for September.
d. Compute the labor efficiency variance for September.
e. Compute the variable overhead rate variance for September.
f. Compute the variable overhead efficiency variance for September.
Inputs Standard Quantity or Hours per Unit of Output Standard Price or Rate Direct materials7.4
liters $ 7.00 per liter Direct labor 0.70 hours $ 21.70 per hour Variable manufacturing overhead 0.70 hours $ 5.90 per hourExplanation / Answer
a) Material price variance (actual price - standard price)*AQ purchased (562,500 - 75000*7) 37500 U b) Material Efficiency variance (actual qty used - std qty allowed)*Std rate (71,050 - 9600*7.4)*7 70 U c) Direct labor rate variance (Actual rate - standard rate)*Actual hours (142,302 - 6410*21.70) 3205 U d) Direct labor Efficiency variance (Actual hours - std hrs allowed)*standard rate (6410 - 9600*.7)*21.70 6,727 F e) Variable overhead rate variance (Actual rate - standard rate)*Actual hours (34614 - 6410*5.90) 3,205 F f) Variable overhead Efficiency variance (Actual hours - std hrs allowed)*standard rate (6410 - 9600*.7)*5.90 1,829 F
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