The following data were drawn from the records of Zachary Corporation. Planned v
ID: 2587704 • Letter: T
Question
The following data were drawn from the records of Zachary Corporation. Planned volume for year (static budget) 3,300 units Standard direct materials cost per unit 2.10 pounds @ $ 1.90 per pound Standard direct labor cost per unit 3.80 hours @ $ 3.30 per hour Total expected fixed overhead costs $ 16,500 Actual volume for the year (flexible budget) 3,500 units Actual direct materials cost per unit 1.60 pounds @ $ 2.20 per pound Actual direct labor cost per unit 4.00 hours @ $ 3.00 per hour Total actual fixed overhead costs $ 12,700 Required Prepare a materials variance information table showing the standard price, the actual price, the standard quantity, and the actual quantity. Calculate the materials price and usage variances. Indicate whether the variances are favorable (F) or unfavorable (U). Prepare a labor variance information table showing the standard price, the actual price, the standard hours, and the actual hours. Calculate the labor price and usage variances. Indicate whether the variances are favorable (F) or unfavorable (U). Calculate the predetermined overhead rate, assuming that Zachary uses the number of units as the allocation base. Calculate the fixed cost spending variance. Indicate whether the variance is favorable (F) or unfavorable (U). Calculate the fixed cost volume variance. Indicate whether the variance is favorable (F) or unfavorable (U).
Explanation / Answer
1.material variance information table:
material price variance = (standard rate - actual rate) actual quantity
= (1.9 - 2.2) *(1.6*3500)
= 0.3* 5600
= 1680 Unfav.
material usage variance = ( standard quantity - actual quantity) standard rate
= [(2.1 - 1.6)*3500] * 1.9
= 3325 fav.
2. labour variance :
labour rate variance = (standard rate - actual rate) actual hours
= (3.3 - 3 ) (4*3500)
= 4200 fav.
labour efficiency variance = (standard hours - actual hours) standard rate'
= [(3.8 - 4)*3500] * 3.3
= 2310 Unfav.
3. predetermined overhead rate = expected fixed overhead / bugeted units
= 16500 / 3300
= $ 5
fixed cost spending variance = actual fixed overhead - budgeted fixed overhead
= 12700 - 16500
= 3800 fav.
fixed cost volume varince = fixed overhead applied - budgeted fixed overhead
= predetermined overhead rate *actual no. of units - budgeted overhead
= ( 5* 3500) - 16500
= 17500 - 16500
= 1000 fav.
standard actual price $ 1.9 $ 2.20 quantity 2.1 1.6Related Questions
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