Exercise 16-36 Variable Cost Variances (LO 16-5) The records of Norton, Inc. sho

Question

Exercise 16-36 Variable Cost Variances (LO 16-5) The records of Norton, Inc. show the following for July Standard labor-hours allowed per unit of output Standard variable overhead rate per standard direct labor-hour Good units produced Actual direct labor-hours worked Actual total direct labor Direct labor efficiency variance Actual variable overhead 2.4 $39 60,000 45,000 $7,215,000 $ 49,000 U $5,465,000 Required: Compute the direct labor and variable overhead price and efficiency variances. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or"U" for unfavorable. If there is no effect, do not select either option.) Direct labor: Price variance Efficiency variance Variable overhead: Price variance Efficiency variance

Explanation / Answer

DIRECT LABOUR:-

Price Variance. :$48,60,000 adverse.

Efficiency Variance. :$39,000 unfavorable.

VARIABLE OVERHEAD:-

Price Variance. :$1,90,000 favourable

Efficiency Variance. :$39,000 adverse.

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