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marin [14]
3 years ago
11

Helix Company produces several products in its factory, including a karate robe. The company uses a standard cost system to assi

st in the control of costs. According to the standards that have been set for the robes, the factory should work 780 direct labor-hours each month and produce 3,900 robes. The standard costs associated with this level of production are as follows:
Total Per Unit of Product
Direct materials $ 78,624 $ 20.16
Direct labor $ 12,870 3.30
Variable manufacturing overhead
(based on direct labor-hours $ 2,340 0.60
$ 24.06
During April, the factory worked only 755 direct labor-hours and produced 4,000 robes. The following actual costs were recorded during the month:
Total Per Unit of Product
Direct materials (14,000 yards) $ 84,000 $ 21.00
Direct labor $ 14,000 3.50
Variable manufacturing overhead $ 7,200 1.80
$ 26.30
At standard, each robe should require 3.2 yards of material. All of the materials purchased during the month were used in production.
Required:
1. Compute the materials price and quantity variances for April: (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" 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). Round your intermediate calculations to 2 decimal places and final answers to the nearest dollar amount.)
Materials price variance $ (Click to select)UFNone
Materials quantity variance $ (Click to select)NoneFU
2. Compute the labor rate and efficiency variances for April: (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" 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). Do not round your intermediate calculations. Round your final answers to the nearest dollar.)
Labor rate variance $ (Click to select)NoneFU
Labor efficiency variance $ (Click to select)UNoneF
3. Compute the variable manufacturing overhead rate and efficiency variances for April: (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" 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). Round your intermediate calculations to 2 decimal places and final answers to the nearest dollar amount.)
Variable overhead rate variance $ (Click to select)UFNone
Variable overhead efficiency variance $ (Click to select)NoneUF
Business
1 answer:
Lemur [1.5K]3 years ago
3 0

Answer and Explanation:

The computation is shown below;

1

Material price variance= (Standard Price-Actual Price) × Actual Qty

= (20.16 ÷ 3.2 - 84000 ÷ 14000) × 14000

= $4200 Favorable

Material Quantity variance= (Standard Qty -Actual Qty ) ×Standard Price

= (4000 ×3.2 - 14000) ×6.3

= $7560 Unfavorable

2

Labour rate variance= (Standard Rate-Actual Rate) ×Actual Hour

= (12870 ÷  780-14000 ÷  755) ×755

= $1542.50 Unfavorable

Labour efficiency variance= (Standard Hour -Actual Hour ) × Standard Rate

= (780 × 4000 ÷  3900 - 755) × 16.50

= $742.50 Favorable

3

Variable Overhead rate variance= (Standard Rate-Actual Rate) × Actual Hour

= (2340 ÷  780-7200 ÷  755) × 755

= $4935 Unfavorable

Variable Overhead efficiency variance= (Standard Hour -Actual Hour ) × Standard Rate

= (780 ×  4000 ÷   3900 - 755) ×  3

= $135 Favorable

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