ruth Co was analyzing variances for one of its operations Th

ruth Co. was analyzing variances for one of its operations. The initial budget forecast production of 10,000 units during the year with a variable manufacturing overhead rate of $5 per unit. Truth produced 9,000 units during the year. Actual variable manufacturing costs were $1605 .000. What amount would be Truth\'s flexible budget variance for the year? A. $5,000 favorable. B. $10,000 favorable. C. $5,000 unfavorable. D. $10,000 unfavorable Use the following information to answer questions 16 and 17: Kingdom Industries produces widgets with budgeted standard direct materials of 5 pounds per widget at $10 per pound and planned for the production of 1,200 widgets. Standard direct labor was budgeted at 1 hour per widget at $15 per hour. The actual usage in the current year was 2,500 pounds and 1,500 hours to produce 1,000 widgets. 16) What was the unfavorable direct labor usage variance? A. $3,750 B. $4,500 C. $7,500 D. $9,000 17) What was the direct material usage variance? A. $12,500 favorable. B. $15,000 favorable. C. $12,500 unfavorable. D. $15,000 unfavorable. Use the following information to answer questions 18 through 20: Mercy Corp.\'s Standard materials usage and cost for one unit of Product A is 10 lbs. at $1 a lb. Actual unit produced were 100 units with 250 lbs. of raw materials and a total cost of $750 18) What was Mercy\'s direct material price variance? A. $250 favorable. B. $500 favorable. unavorable C. $750 unfavorable D. $750 favorable. 19) What was Mercy\'s direct material usage variance? A. $250 favorable. B. $250 unfavorable. C. $750 unfavorable. D. $750 favorable. 20) What was Mercy\'s total direct material variance? A. $250 favorable B. $250 unfavorable C. $750 unfavorable. D. $750 favorable

Solution

15). Flexible Budget Variance :-

= Budgeted Cost - Actual Cost

= (10000 * $5) - $55000

= $50000 - $55000

= $5000 Unfavorable.

16). Direct Labor Usage Variance :-

= (Budgeted Labor Work - Actual Labor Work) * Labor Rate

= ((1200 * 1hr.) - 1500hr.) * $15 per hr.

= 300hr * 15 per hr.

= $4500 Unfavorable

17). Direct Material Usage Variance :-

= (Budgeted Material usage - Actual Material Usage) * Standard Price

= ((1000*5) - 2500) * $10 per pound

= (5000 - 2500) * $10 per pound

= 2500 * $10 per pound

= $25000

18). Direct Material Price Variance :-

= (Budgeted Material Price - Actual Material Price) * Actual Usage

= ($1 - ($750/250lbs)) * 250 lbs

= ($1 - $3) * 250 lbs

= $2 * 250 lbs

= $500 Unfavorable

19). Direct Material Usage Variance :-

= (Budgeted Material Usage - Actual Material Usage) * Standard Rate

= ((100 unit * 10 lbs) - 250 lbs) * $1

= (1000 lbs - 250 lbs) * $1

= 750 lbs *$1

= $750 Favorable

20). Total Direct Material Variance :-

= Total Budgeted Material Cost - Total Actual Material Cost

= (100unit * 10lbs * $1) - $750

= $1000 - $750

= $250 favorable