Topline Surf Boards manufactures a single product. The standard cost of one unit
ID: 2779090 • Letter: T
Question
Topline Surf Boards manufactures a single product. The standard cost of one unit of this product is as follows: During October, 5,600 units were produced. Selected data relating to the month?s production follow: There was no beginning inventory of raw materials. The variable manufacturing overhead rate is based on direct labor-hours. Required: 1. For direct materials: a. Compute the price and quantity variances for October. (Input all amounts as positive values. Leave no cells blank - be certain to enter O wherever required. Indicate the effect of each variance by selecting F for favorable, U for unfavorable, and None for no effect (i.e., zero variance). Omit the $ sign in your response.)Explanation / Answer
1
a)
1) Materials price variance = (Actual price - Standard Price) *Actual Quantity
Materials price variance = (0.85 - 0.90 )*63000
Materials price variance = $ 3150 Unfavorable
2). Materials usage/quantity variance = (Actual Quantity Used- Standard Quantity)Standard Price
Materials usage/quantity variance = (38500 -5600*5)*0.90
Materials usage/quantity variance = $ 9450 Unfavorable
b)
2
a)
Variable Overhead efficiency variance =(Actual Direct Labor Hour-Standard Direct Labor Hour )Standard Rate
1400 = (Actual Direct Labor Hour-5600*1)*2.80
Actual Direct Labor Hour = 1400/2.80 + 5600
Actual Direct Labor Hour = 6100
1) Labor rate variance = (Actual Rate-Standard Rate)*Actual Hour
Labor rate variance = (26840/6100 - 5.10)*6100
Labor rate variance = $ 4270 Favorable
2) Labor efficiency variance = (Actual Hour-Standard Hour )Standard Rate
Labor efficiency variance = (6100-5600)*5.10
Labor efficiency variance = 2550 Unfavorable
b)
General Journal Debit Credit Raw Material 56700 Material Price Variance 3150 Accounts Payable 53550 Work in Process 25200 Material Quantity Variance 9450 Raw Material 34650