GIVEN: The company produced and sold 25,000 batches and recorded the following:

Question

GIVEN:
The company produced and sold 25,000 batches and recorded the following:

Standard Cost Information:
Direct material .6 lbs per batch $1.75 per lb
Direct labor .5 hours per batch $4.5 per hour
Variable mfg overhead .5 hours per batch $1.50 per hour
Fixed mfg overhead ($35,000 for static budget of 20,000 batches and 10,000 hours, or $3.50 per hour)

Actual Information:
Direct materials (14,500 lbs @ $2 = $29,000)
Direct labor (13,000 hours @ $5 = $65,000)
Manufacturing overhead $80,000

FIND:
Direct material price variance
Direct material efficiency variance
Direct labor price variance
Direct labor efficiency variance
Manufacturing overhead total variance
Manufacturing overhead flexible budget variance
Manufacturing overhead production volume variance

Explanation / Answer

1.Direct material price variance = (Actual quantity xActual Price) - (Actual quantity x standard price)                                                 =(14,500 x $2) - (14,500 x $1.75)                                                 =29,000 -25,375                                                 = $3,625 U 2.Direct material efficiency variance = (Actual Price - Standard Price) Actual Quantity                                                         = ($2-$1.75)14,500                                                         =$0.25*14,500                                                         =$3,625Unfavorable 3.Drice Labor price variance = (Actual hours x Actual rate) - (Actual hours x standard rate)                                             =(13,000 x$5)-(13,000x$4.5)                                              =$65,000 - $58,500                                              =$6,500U 4.Labor Efficiency variance = SR(AH - SH)                                            =$4.5(13,000-12,500)                                           =$4.5(500)                                            =$2,250U 5.Manufacturing overhead total variance = Actual overhead - Overhead applied at standard hours allowed.                                                               =$80,000 - $62,500                                                               =$17,500U 6.Manufacturing overhead flexible budget variance = Actual fixed overhead - budgeted fixedoverhead                                                                              =$80,000 -$43,750                                                                               =$36,250U 7.Manufacturing overhead production volume variance= Total factory overhead/Direct labor hours

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