CHAP 22 Show your calculations on the next page Standard cos

CHAP 22:

Show your calculations on the next page Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 24,000 units of product were as follows Each unit requires 0.5 hours of direct labor at standard.) Standard Cost Actual Cost Direct Materials 10,000 lbs. a 15 9,800 lbs. Direct Labor 12,000 Hrs. a 20 12,200 Hrs. a 19 Factory Overhead Rates per direct labor hour based on 100% capacity of 12,500 labor hours S 12.00 per DL Hr S 7.50 per DL Hr 140,000 total variable cost Variable Cost Fixed Cost 93,750 total fixed cost Instructions: Calculate the following variances (a) Direct Materials Quantity Variance (b) Direct Materials Price Variance (c) Direct Labor Time Variance (d) Direct Labor Rate Variance (e) Factory Overhead Controllable Variance* (f) Factory Overhead Volume Variance* Circle Fav. UnFav. Fav. UnFav. Fav. UnFav. Fav. UnFav. Fav. UnFav. Fav. UnFav. . Show all work: *Hint: For FOH use ACTUAL PRODUCTION at STANDARD USAGE

Solution

1. Direct material quantity variance =
Standard quantity - actual quantity
=10000lbs-9800lbs
= 200 lbs Favourable

2. Direct Material price Variance=
(Standard price-Actual price)*Actual quantity
(15-16)*9800
= (9800) Adverse

3. Direct Labour time variance
= standard time - Actul time
= 12000Hrs - 12200Hrs
= (200) Hrs Adverse

4. Direct Labour Rate Variance=
(Standard rate-Actual Rate)*Actual hours worked
=(20-19)*12200
=12200 Favourable

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