Answer:
a) The materials price variance 19026.33 unfav
b) Material Quantity Variance= $ 267 Unfav
c) Direct Labor Rate variance= $ 6127 Unfav
d) Direct labor Efficiency variance= 7710 Fav
e) Variable Overhead Rate Variance= 13099 fav
f) Variable Overhead Efficiency Variance= 3256.25 unfav
Explanation:
<em>First We find the missing figures such as standard quantity ,hours allowed , actual price, rate. Then we list the formulae to use. After that we put in the values of the amounts in the formulae to get the results. Unfavorable variances are those in which the actual quantities are greater than the standard quantities or input .</em>
Kropf Inc.
Given Standards
Direct materials 9.30 liters $ 8.90 per liter
<em>Standard Quantity allowed = 9.3 * 11500= 106950 Litres </em>
Direct labor 0.70 hours $ 25.70 per hour
Variable manufacturing overhead 0.70 hours $ 7.80 per hour
<em>Standard Hours Allowed </em>= $ 0.7 *11500= 8050
Actual Results Given
Actual output 11,500 units
Raw materials purchased 107,900 liters
Actual cost of raw materials purchased $ 979,500
<em>Actual Price</em><em>=</em> Cost/ Purchases= $ 979,500/107,900 = $9.08
Raw materials used in production 106,980 liters
Actual direct labor-hours 7,750 hours
Actual direct labor cost $ 205,302
<em>Actual Rate</em><em>=</em>$ 205,302 / 7,750 = $ 26.49
Actual variable overhead cost $ 55,414
Actual Overhead Rate= $ 55,414/7,750 = $ 7.15
<u>Formulae to use </u>
1)The materials price variance = (Actual Price * Actual Quantity)- (Standard Price * Actual Quantity)
2) Material Quantity Variance= (Standard Price * Actual Quantity)-(Standard Price * Standard Quantity)
3) Direct Labor Rate variance= (actual hours* actual rate)- (actual hours * standard rate)
4) Direct labor Efficiency variance= (actual hours* standard rate)- (standard hours * standard rate)
5) Variable Overhead Rate Variance= Actual Variable Overhead- Standard Variable Overhead
6)Variable Overhead Efficiency Variance=( Actual Hours * Standard Variable Overhead Rate)-( Standard Hours * Standard Variable Overhead Rate)
<u>Working</u>
1)The materials price variance = (Actual Price * Actual Quantity)- (Standard Price * Actual Quantity)
The materials price variance = ( $9.08*106,980 )- ($ 8.90 *106,980)
The materials price variance = (971148.38)- (952122)=19026.33 unfav
2) Material Quantity Variance= (Standard Price * Actual Quantity)-(Standard Price * Standard Quantity)
Material Quantity Variance=($ 8.90 *106,980)-($ 8.90 *106,950)= $ 267 Unfav
3) Direct Labor Rate variance= (actual hours* actual rate)- (actual hours * standard rate)
Direct Labor Rate variance= ( 7,750*$ 26.49)- (7,750*$ 25.70)= $ 6127 Unfav
4) Direct labor Efficiency variance= (actual hours* standard rate)- (standard hours * standard rate)
Direct labor Efficiency variance=(7,750*$ 25.70)-(8050*$ 25.70)= 7710 Fav
5) Variable Overhead Rate Variance= Actual Variable Overhead- Standard Variable Overhead
Variable Overhead Rate Variance=$ 55,414-( Actual Hours * Standard Variable Overhead Rate)
Variable Overhead Rate Variance=$ 55,414-(7,750*0.70 * $ 7.80)
Variable Overhead Rate Variance=$ 55,414- 42315= 13099 fav
6)Variable Overhead Efficiency Variance=( Actual Hours * Standard Variable Overhead Rate)-( Standard Hours * Standard Variable Overhead Rate)
Variable Overhead Efficiency Variance= (7,750*0.70 * $ 7.80)- (7,750*0.70 * $ 7.15)=42315- 38788.15= 3256.25 unfav
