# 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

79,000

Spending variance

1,000

F

Efficiency variance

600

U

Actual Costs

Direct material

Direct labor

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

1,000 = 79,000 – Actual variable overheads

 Actual cost Direct material \$154,000 Direct labor \$138,200 Variable overhead \$78,000

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