Answer:
1. a. The Material price variance is $8,050 U
The Material quantity variance is $920 F
b. The Labor rate variance is $6,555 F
The Labor efficiency variance is $10,350 U
c. The Variable overhead rate variance is $4,370 F
The Variable overhead efficiency variance is $3,450 U
2. Excess of actual cost over standard cost per unit is $12,600.00 U
3. Portion due to other variances is $1,200.00 F
Explanation:
1. a. To calculate the Materials price and quantity variances we would have to use the following formula:
Material price variance = (SP - AP) * AQ = ($1.60 - $2) * (11,500*1.75) = $8,050 U
Material quantity variance = (SQ - AQ) * SP = (11,500*1.80 - 11,500*1.75) * $1.60= $920 F
b. To calculate the Labor rate and efficiency variances we would have to use the following formula:
Labor rate variance = (SR - AR) * AH = ($18 - $17.40) *(11,500*0.95) = $6,555 F
Labor efficiency variance = (SH - AH) * SR = (11,500*0.90 - 11,500*0.95) * $18 = $10,350 U
c. To calculate the Variable overhead rate and efficiency variances we would have to use the following formula:
Variable overhead rate variance = (SR - AR) * AH = ($6 - $5.60) * (11,500*0.95) = $4,370 F
Variable overhead efficiency variance = (SH - AH) * SR = (11,500*0.90 - 11,500*0.95) * $6 = $3,450 U
2.
Variance
Materials:
Price Variance $8,050 U
Quantity Variance $920.00 F $7,130.00 U
Labor:
Rate variance $6,555.00 F
Efficiency varianc $10,350.00 U $6,390.00 U
Variable overhead:
Rate variance $4,370.00 F
Efficiency variance$3,450.00 U $920.00 F
Excess of actual cost over standard cost per unit $12,600.00 U
3.
Variance
Excess of actual over standard $12,600.00 U
cost per unit
Less: Portion attributable to labor efficiency:
Labor Efficiency variance $10,350.00 U
Variable overhead Efficiency variance $3,450.00 U $13,800.00 U
Portion due to other variances $1,200.00 F
