Ch10 demonstration

Ch10 demonstration - Variance analysis demonstration...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Variance analysis demonstration problem Joe Smith, the production supervisor, was happy to see the report below. He stated, "This $.76 excess cost per unit is well within the 3 percent range management has set for acceptable variances. We have nothing to worry about." Actual production for the month was 4,000 units. Overhead is assigned to products using direct labor-hours. For the month ended June 30, 20XX Standard Actual Direct materials: usage rate Cost-unit Cost-unit Standard: feet 3.5 $1.46 $5.11 Actual: feet 3.4 $1.50 $5.10 Direct Labor: Standard: hours 2 $9.00 18.00 Actual: hours 2.1 $8.90 18.69 Variable overhead: Standard: hours 2 $1.85 3.70 Actual: hours 2.1 $1.80 3.78 $26.81 $27.57 Explanation Excess of actual cost over standard cost 0.76 26.81-27.57 Percentage variance 2.83% .76/26.81 Actual units produced 4,000 units Required: Identify if the variances are favorable or unfavorable. Total variance #1 Per unit #2 a. Materials price and usage variances Price variance
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/13/2011 for the course MBA 642 taught by Professor Jamesstephens during the Summer '11 term at Bellevue.

Ask a homework question - tutors are online