Please assist with solving this variance question! I gotta figure out how to wor
ID: 2525983 • Letter: P
Question
Please assist with solving this variance question! I gotta figure out how to work backwards, but I can't seem to understand it.
You recently accepted an accounting position with Wainright Industries, the manufacturer of rophies. Since everyone gets a participation trophy nowadays, business is good! Earlier this week, the CFO liscussion on last month's variances. You prepared a detailed analysis, but just now your loser of asked you to attend this afternoon's executive committee meeting and lead a roommate, Karen, spilled coffee all over your computer and wiped out your entire hard drive. You only have a one-page hard copy printout, which contains the following information Standard Cost Card Direct materials, 6 pounds at $3 per pound Direct labor, 0.8 direct-labor hours at $15 per direct-labor hour Variable manufacturing overhead, 0.8 direct-labor hours at $3 per direct-labor hour Standard Cost Per Unit $18.00 $12.00 $2.40 $32.40 Total Variances Reported Price or Rate Quantity or Efficiency Standard Cost $405,000 $270,000 $54,000 $6,900 F $14,550 U $1,300 F $9,000 U $21,000 U 7 U Direct materials Direct labor Variable manufacturing overhead It's now 12:40pm and the executive committee meeting starts at 2:00pm. To avoid looking like a complete fool, you must generate the necessary backup data for the variances before the meeting begins. Without the backup data it will be impossible to lead any kind of meaningful discussion. 1. How many units were produced last year? (3pts) 2. How many pounds of direct material were used in production? (3pts) 3. What was the actual cost per pound of material? (3pts) 4. How many actual direct labor hours were worked during the period? (3pts) 5. What was the actual rate paid per direct labor hour? (3pts) 6. How much extra was the actual variable cost per unit than the standard cost per unit? (5ptsExplanation / Answer
As per chegg policy have answered the first four subparts.
1. Total Standard Cost for Actual Production = $405,000
$405,000 = Standard Units for actual production * Standard Rate
Units produced = $405,000 / $18 = 22,500 units
2. Material Quanity variance = (Standard Quantity - Actual Quantity ) * Standard rate
-9000 = (22500*6 - Actual Quantity ) * 18
Actual Quantity = 135,500 pounds
3. Price Variance = (Standard Price - Actual Price ) * Actual Quantity
6900 = (18- Actual Price ) * 22500
Actual Price = $ 17.7
4. Labor effiiciency variance = (Standard hours - Actual Hours ) * Standard Rate
-21000 = ( 22500*0.8 - Actual Hours ) *15
Actual Hours = 19400 hours