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Chapter 9, End Of Chapter, REVIEW PROBLEMS, Exercise 01

# Materials, Labor, and Overhead Variances Bertgon Manufacturing has the following standard cost sheet for one of its products:Direct materials (6 ft. @ \$5)\$30Direct labor (1.5 hours @ \$10)15Variable overhead (1.5 hours @ \$4)6Fixed 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 unitsFixed overhead\$ 33,000Variable overhead\$ 69,000Direct materials (71,750 ft. purchased)\$361,620Direct labor (17,900 hours)\$182,580Required: Compute the following variances: Direct materials price and usage variances.

### Explanation

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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