Answer:
a. Total rate variance = $1,660 Unfavorable
b. Total efficiency variance = $450 Unfavorable
Explanation:
From the question, we have:
Standard for hops = 20 pounds per barrel
Standard rate = Standard rate for hops = $13.00 per pound
Barrels of Hopalong beer produced = 40
Actual quantity = Actual pounds of hops used = 830 pounds
Standard quantity = Standard pounds of hops = Standard for hops * Barrels of Hopalong beer produced = 20 * 40 = 800 pounds
Actual rate = Actual cost of hops per pound = $15
Therefore, we have:
a. Compute the total rate variance for the past month
Total rate variance = (Actual rate - Standard rate) * Actual quantity = ($15 - $13) * 830 = $1,660 Unfavorable
The total rate variance of $1,660 is unfavorable because the Actual rate is greater than the Standard rate.
b. Compute the total efficiency variance for the past month
Total efficiency variance = (Actual quantity - Standard quantity) * Standard rate = (830 - 800) * $15 = $450 Unfavorable
The total efficiency variance of $450 is unfavorable because the Actual quantity is greater than the Standard quantity.
