Question 5 – Chapter 10 Workin
Question 5 – Chapter 10
Working With Variances
From the following data, determine the total actual costsincurred for direct material, direct labor, and variableoverhead.
|
Standard Costs |
Variances |
|||
|---|---|---|---|---|
|
Direct material |
$155,000 |
|||
|
Price variance |
3,000 |
U |
||
|
Quantity variance |
4,000 |
F |
||
|
Direct labor |
135,000 |
|||
|
Rate variance |
1,400 |
U |
||
|
Efficiency variance |
1,800 |
U |
||
|
Variable overhead |
79,000 |
|||
|
Spending variance |
1,000 |
F |
||
|
Efficiency variance |
600 |
U |
||
|
Actual Costs |
|
|---|---|
|
Direct material |
|
|
Direct labor |
|
|
Variable overhead |
Answer:
Calculation of material variances
Direct material quantity variance = Standard price x (Standardquantity – Actual quantity)
4,000 = (Standard price x Standard quantity) – (Standard price xActual quantity)
4,000 = 155,000 – (Standard price x Actual quantity)
Standard price x Actual Quantity = $151,000 (equ i)
Direct material price variance = Actual quantity x (Standardprice – Actual price)
– 3,000 = Actual quantity x (Standard price – Actual price)
– 3,000 = (Standard price x Actual Quantity) – (Actual price xActual quantity)
– 3,000 = 151,000 – (Actual price x Actual quantity)
Actual cost = $154,000
Calculation of labor cost variances
Direct labor efficiency variance = Standard rate x (Standardtime – Actual time)
-1,800 = (Standard rate x Standard time) – (Standard rate xActual time)
-1,800 = 135,000 – (Standard rate x Actual time)
Standard rate x Actual time = 136,800
Direct labor rate variance = Actual time x (Standard rate -Actual rate)
-1,400 = (Standard rate x Actual time) – (Actual rate x Actualtime)
-1,400 = 136,800 – (Actual rate x Actual time)
Actual rate x Actual time = 136,800 + 1,400
Actual cost = $138,200
Calculation of variable overhead variances
Variable overhead spending variance = Standard variableoverheads – Actual variable overheads
1,000 = 79,000 – Actual variable overheads
Actual variable overheads = $78,000
| Actual cost | |
| Direct material | $154,000 |
| Direct labor | $138,200 |
| Variable overhead | $78,000 |
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