Chapter 9, End Of Chapter, REVIEW PROBLEMS, Exercise 01
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Materials, Labor, and Overhead Variances

 

Bertgon Manufacturing has the following standard cost sheet for one of its products:

Direct materials (6 ft. @ $5)$30
Direct labor (1.5 hours @ $10)15
Variable overhead (1.5 hours @ $4)6
Fixed overhead (1.5 hours @ $2*)3
 Standard unit cost$54

*Rate based on expected activity of 17,000 hours.

 

During the most recent year, the following actual results were recorded:

Production12,000 units
Fixed overhead$ 33,000
Variable overhead$ 69,000
Direct materials (71,750 ft. purchased)$361,620
Direct labor (17,900 hours)$182,580

Required:

 

Compute the following variances:

 

Direct materials price and usage variances.

Materials, Labor, and Overhead Variances

 

Bertgon Manufacturing has the following standard cost sheet for one of its products:

Direct materials (6 ft. @ $5)$30
Direct labor (1.5 hours @ $10)15
Variable overhead (1.5 hours @ $4)6
Fixed overhead (1.5 hours @ $2*)3
 Standard unit cost$54

*Rate based on expected activity of 17,000 hours.

 

During the most recent year, the following actual results were recorded:

Production12,000 units
Fixed overhead$ 33,000
Variable overhead$ 69,000
Direct materials (71,750 ft. purchased)$361,620
Direct labor (17,900 hours)$182,580

Required:

 

Compute the following variances:

 

Direct labor rate and efficiency variances.

Materials, Labor, and Overhead Variances

 

Bertgon Manufacturing has the following standard cost sheet for one of its products:

Direct materials (6 ft. @ $5)$30
Direct labor (1.5 hours @ $10)15
Variable overhead (1.5 hours @ $4)6
Fixed overhead (1.5 hours @ $2*)3
 Standard unit cost$54

*Rate based on expected activity of 17,000 hours.

 

During the most recent year, the following actual results were recorded:

Production12,000 units
Fixed overhead$ 33,000
Variable overhead$ 69,000
Direct materials (71,750 ft. purchased)$361,620
Direct labor (17,900 hours)$182,580

Required:

 

Compute the following variances:

 

Variable overhead spending and efficiency variances.

Materials, Labor, and Overhead Variances

 

Bertgon Manufacturing has the following standard cost sheet for one of its products:

Direct materials (6 ft. @ $5)$30
Direct labor (1.5 hours @ $10)15
Variable overhead (1.5 hours @ $4)6
Fixed overhead (1.5 hours @ $2*)3
 Standard unit cost$54

*Rate based on expected activity of 17,000 hours.

 

During the most recent year, the following actual results were recorded:

Production12,000 units
Fixed overhead$ 33,000
Variable overhead$ 69,000
Direct materials (71,750 ft. purchased)$361,620
Direct labor (17,900 hours)$182,580

Required:

 

Compute the following variances:

 

Fixed overhead spending and volume variances.

Explanation

Answer

Please see attached image for computation. :)


For materials variance we can use the AAS formula


A = Actual material used or purchased x Actual price per unit

A = Actual material used or purchased x Standard price per unit

S = Standard use of materials x standard price per unit


** for standard use of materials = actual production x standard materials needed to produced on unit


Applying the formula.. see the image attached :))

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