Medex Pharmaceutical developed the following standard costs for its product in 2
ID: 2489369 • Letter: M
Question
Medex Pharmaceutical developed the following standard costs for its product in 2014: The company planned to work 2 725 direct labor hours and planned to produce 10,900 units of product in 2014. Actual results for 2014 are as follows: 11,000 units of product were produced Actual direct materials purchased and used during the year amounted to 13,750 pounds at a cost of $28,875. Actual direct labor costs were $33,320 for 2.800 direct labor hours worked. Total actual manufacturing overhead incurred amounted to $35,740. Instructions Calculate the following variances showing all computations supporting your answers Indicate if the variances are favorable (F) or unfavorable (U). Direct materials price and direct materials quantity variances. Direct labor price and direct labor quantity variances Total overhead variance.Explanation / Answer
Fixed Overhead Total Variance = Actual Fixed Overheads - Absorbed Fixed Overheads - See more at: http://accounting-simplified.com/management/variance-analysis/fixed-overhead/total.html#sthash.zX5C0M0e.dpuf
Material price variance actual cost 28875 standard cost at actual quantity 11000 1.2*2 26400 variance 2475 U direct material quantity variance (standard quantity-actual quantity)*standard price -1100 U standard quantity 13200 actual quantity 13750 direct labor price variance actual labor cost 33320 standard labor cost at actual quantity 33000 320 U total overhead varianceFixed Overhead Total Variance = Actual Fixed Overheads - Absorbed Fixed Overheads - See more at: http://accounting-simplified.com/management/variance-analysis/fixed-overhead/total.html#sthash.zX5C0M0e.dpuf
total manufacturing overhead 35740 standard manufacturing overhead at actual cost 35200 540 U