Please signify the answers clearly. Please signify the answers clearly. Koontz C
ID: 2601879 • Letter: P
Question
Please signify the answers clearly.
Please signify the answers clearly.
Koontz Company manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May 0 30 The production superintendent was pleased when he saw this report and commented: This $0.30 excess cost is well within the 2 percent limit management has set for acceptable variances. It's obvious that there's not much to worry about with this product. Actual production for the month was 10,000 units. Variable overhead cost is assigned to products on the basis of direct labor-hours. There were no beginning or ending inventories of Required Compute the following variances for May Materials price and quantity variances. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e, zero variance).) Labor rate and efficiency variances. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U for unfavorable, and "None" for no effect (ie, zero variance).)
Explanation / Answer
1 a Answer :-
Material price variance = Actual Quantity (Actual price - Standard price)
= 10,000 units × 1.75 feet ($2.20 - $2.00)
= $17,500 ($0.20)
Material Price Variance = $3500 unfavourable
Material Quantity Variance = Standard Price ( Actual Quantity - Standard Quantity )
= $ 2 (10000 - (10000 × $1.80))
= $2 (10000 - 18000)
= $2 (8000)
Material Quantity Variance = $16000 Favourable
1 b Answer :-
Labour Rate Variance = Actual Hours (Actual Rate - Standard Rate)
= 10000 units × $0.95 hours ( $15.40 - $16.00)
= $9,500 ($0.60)
Labour Rate Variance = $5700 Favourable
Labour Efficiency Variance = Standard Rate ( Actual Hours - Standard Hours )
= $16.00 ( (10000 units × $0.95) - 10000 units × $0.90)
= $16.00 ($9500 - $9000)
= $16.00 ($500)
= $8000 Unfavourable
1 C Answer :-
Variable overhead rate variance = Actual Hours ( Actual Rate - Standard Rate)
= 10000 units × $0.95 ($3.60 - $4.00)
= $9500 ($0.40)
= $3800 Favourable
Variable Overhead Efficiency Variance = Standard Rate ( Actual Hours - Standard Hours )
= $4.00 ((10000 units × $0.95) - (10000 units × $0.90))
= $4 ($9500 - $9000)
= $4 ($500)
= $2000 Unfavourable