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# 10-59 - SVR = \$5,500 –(4,000(\$1.50 = \$500 Favourable...

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10-59 (35 MINUTES) 1. Calculation of variances: Direct-material price variance = PQ(AP – SP) = 15,000(\$2.20* – \$2.00) = \$3,000 U *\$2.20 = \$33,000 ÷ 15,000 Direct-material quantity variance = SP(AQ – SQ) = \$2.00(15,000 – 14,500*) = \$1,000 U *14,500 lbs. = 725 × 20 kg. per unit Direct-labour rate variance = AH(AR – SR) = 4,000(\$18.90* – \$18.00) = \$3,600 Unfavourable *\$18.90 = \$75,600 ÷ 4,000 Direct-labour efficiency variance = SR(AH – SH) = \$18.00(4,000 – 3,625*) = \$6,750 Unfavourable *3,625 hours = 725 units × 5 hours per unit Variable-overhead spending variance = actual variable overhead – (AH × SVR)
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Unformatted text preview: SVR) = \$5,500 – (4,000)(\$1.50) = \$500 Favourable Variable-overhead efficiency variance = SVR(AH – SH) = \$1.50(4,000 – 3,625) = 562.50 U Fixed-overhead budget variance = actual fixed overhead – budgeted fixed overhead = \$13,000 – \$12,500* = \$500 Unfavourable *\$12,500 = \$150,000 (annual) ÷ 12 months Fixed-overhead volume variance = budgeted fixed overhead – applied fixed overhead = \$12,500 – \$10,875* = \$1,625 U † *\$10,875 = 725 units × \$15.00 per unit † Some accountants would designate a positive volume variance as "unfavourable."...
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