Material, Labor, and Variable Overhead Variances The following summarized manufa
ID: 2569782 • Letter: M
Question
Material, Labor, and Variable Overhead Variances
The following summarized manufacturing data relate to Thomas Corporation's April operations, during which 2,000 finished units of product were produced. Normal monthly capacity is 1,100 direct labor hours.
Determine the following variances:
Do not use negative signs with any of your answers. Next to each variance answer, select either "F" for Favorable or "U" for Unfavorable.
Standard Units Costs Total Actual Costs Direct material Standard (2 lb. @ $18.00/lb.) $36 Actual (4,200 lb. @ $19/lb.) $79,800 Direct labor Standard (0.5 hr. @ $33/hr.) $16.50 Actual (950 hrs. @ $32.20/hr.) 30,590 Variable overhead Standard (0.5 hr. @ $15/hr.) $7.50 Actual - 15,450 Total $60 $125,840Explanation / Answer
Materials Variances
Actual cost: Refer C =$7800
Split cost: Refer
Standard cost: Refer D =$600
Materials price Refer A =Unfavourable
Materials efficiency Refer b= Favourable
a)
Material Price variance Actual Quantity x (Actual price-standard price)
=4200x(19-18)
=$4200 Unfavourable as the actual price is more than the standard price
b)
Material efficiency variance =(Standard quantity-Actual quantity)xstandard price
=(4400-4200)x18
=$3600 Favourable as the actual quantity needed to produce the finished product was less than the standard quantity
*Standard Quantity 1100 is the normal direct hours and for producting 1 unit .5 hours of direct labour hour is used
therfore total standard finished product will be "=1100/.5=2200
=For producing one unit of finisher product 2 LB of raw material is used, so total standard quantity will be "=2200*2=4400
c)
Actual cost: = Material price variance + Material efficiency variance
=$4200+$3600
=7800
d)
Standard cost: = variance is the difference between actual cost incurred versus the standard cost
=Actual cost -Standard cost
=4200x19-4400x18
=79800-79200
=600
Labor Variances
Actual cost: $Answer
Split cost: $Answer
Standard cost: $Answer
Labor rate Refer a Favourable as the standard cost was higher
Labor efficiency refer b Favourable
a) Labor rate variance = (actual hours x actual rate)- (actual hoursx standard rate)
=(950x32.20)-(950x33)
=30590-31350
=760
b) Labor efficiency variance =(standard cost-actual quantity)-(standard costxstandard quantity)
=(actual hours-standard hours)xstandard cost
=(32.20-33)x1100
=$880
Variable Overhead Variances
Actual cost: $Answer
Split cost: $Answer
Standard cost : $Answer
Variable overhead spending
Variable overhead efficiency refer a Favourable as the actual spending is less than the expected spending
a) Variable overhead efficiecny
=1100x15-15450
=16500-15450
=$1050