# Direct labor 4 hr 2000 800 variable indirect costs 4

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Direct labor, .4 hr. @ \$20.00 8.00 Variable indirect costs, .4 hr. @ \$6.00 2.40 Fixed indirect costs, .4 hr. @ \$4.00 1.60 Total \$27.00
Example: The Vanguard Company Actual Price Standard Costs Total Var. Price Var. Eff. Var. PVV \$134,400 \$135,000 \$600 \$5,600 F \$5,000 U --- 77,900 72,000 5,900 1,900 U 4,000 U --- 21,500 21,600 100 1,300 1,200 U --- 15,800 14,400 1,400 200 -- \$1,600 U \$249,600 \$243,000 \$6,600 \$5,200 \$10,200 U \$1,600 U DM DL VOH FOH
Example: The Vanguard Company Direct materials were quoted at \$5.50 per pound through- out September and October to all suppliers. There was no purchase-price variance for materials in October; the price variance shown relates solely to the materials used during October. Wage standards were set in accordance with an annual union contract, but a shortage of workers in the local areas has resulted in rates higher than standard. There were no beginning or ending inventories of work in process.
Example: The Vanguard Company 1. How many units were produced? Use the standard cost column. All the units manufactured cost \$243,000 One unit at standard costs \$27.00 Units produced = \$243,000 / \$27.00 = 9,000 units
Example: The Vanguard Company 2. What were the actual number of direct labor hours used?
Example: The Vanguard Company 3. What was the actual wage rate?
Example: The Vanguard Company 4. What was the budget for fixed indirect costs.
Example: The Vanguard Company 5. Denominator activity expressed in direct labor hours. \$14,400 output actual x hrs. std. x Volume r Denominato FOH Budgeted = \$14,400 9 x hrs. . x Volume r Denominato FOH Budgeted = 000 , 4 \$14,400 9 x hrs. . x Volume r Denominato \$16,000 = 000 , 4 Denominator Volume = 4,000 DL hrs.
Example: The Vanguard Company