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. Standard Units Costs Total Actual Costs Direct material Standard (2 lb. @ $9.00/lb.) $18 Actual (4,200 lb. @ $10.20/lb.) $42,840 Direct labor Standard (0.5 hr. @ $24/hr.) $12 Actual (950 hrs. @ $23.40/hr.) 22,230 Variable overhead Standard (0.5 hr. @ $6/hr.) $3 Actual - 6,450 Total $33 $71,520 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. Materials Variances Actual cost: Answer Split cost: Answer Standard cost: Answer Materials price Answer Answer Materials efficiency Answer Answer Labor Variances Actual cost: Answer Split cost: Answer Standard cost: Answer Labor rate Answer Answer Labor efficiency Answer Answer Variable Overhead Variances Actual cost: Answer Split cost: Answer Standard cost: Answer Variable overhead spending Answer Answer Variable overhead efficiency Answer Answer

Answer 1

Answer:

DIRECT MATERIALS VARIANCES

price variance 5,040.00U

quantity variance  1,800.00U

DIRECT LABOR VARIANCES

rate variance  $ 570.00F

efficiency variance 1,200.00F

OVERHEAD VARIANCE

Spending Variance 750U

Capacity Variance or volume variance. 900U

Efficiency 300F

Explanation:

DIRECT MATERIALS VARIANCES

$(standard\:cost-actual\:cost) \times actual \: quantity= DM \: price \: variance$

std cost            $   9.00

actual cost    $  10.20

quantity           4,200

price variance 5,040.00U

$(standard\:quantity-actual\:quantity) \times standard \: cost = DM \: quantity \: variance$

std quantity   4000.00 (output 2,000 lbs stdQ 2 lbs perunit)

actual quantity 4200.00

std cost                 $9.00

quantity variance  1,800.00U

DIRECT LABOR VARIANCES

$(standard\:rate-actual\:rate) \times actual \: hours = DL \: rate \: variance$

std rate          $   24.00

actual rate  $   23.40

actual hours  950

rate variance   570.00F

$(standard\:hours-actual\:hours) \times standard \: rate = DL \: efficiency \: variance$

std  hours         1000.00

actual hours           950.00

std rate                   $24.00

efficiency variance 1,200.00F

OVERHEAD-THREE VARIANCE METHOD

Efficiency:

Actual hour based on standard rate - Standard hour based on standard rate

950  direct labor x 6/hr - 2,000 x 0.5 x 6 = 300F

Spending Variance

Actual Factory Overhead - Budgeted Allowance based on actual hour

(AFOH - BAAH)

6,450 - 950 x 6 = 6,450 - 5,700 = 750U

Capacity Variance or volume variance.

Difference for overabsorption or underabsorption because differnce in actual hours and normal capacity

Budgeted Allowance based on Actual Hour - Actual Hour based on standard rate

1,100 x 6 - 950 x 6 = 6,600 - 5,700 = 900U