P1 Variance Computations with Missing Data

The following information is provided to assist you in evaluating the performance of the production
operations of Paramount Company:
Units produced (actual)

21,000

Master production budget

Direct materials
Direct labor
Overhead

165,000
140,000
199,000

Standard costs per unit

Direct materials
Direct labor
Variable overhead

$1.65 x 5 pounds per unit of output

$14 per hour x hour per unit
$11.90 per direct labor-hour

Actual costs
Direct materials purchased and used
Direct labor
Overhead

$188,700 (102,000 pounds)

140,000 (10,700 hours)
204,000 (61% is variable)

Variable overhead is applied on the basis of direct labor-hours.

Required:
Prepare a report that shows all variable production cost price and efficiency variances and fixed production
cost price and production volume variances.

P2 - Comprehensive Variance Problem

Flintco Company manufactures two products, Florimene and Glyoxide, used in the plastics industry. The
company prepares its master budget on the basis of standard costs. The following data are for August:

Standards
Direct Materials
Direct Labor
Variable Overhead (per direct labor-hour)
Fixed Overhead (per month)
Expected Activity (direct labor-hours)
Actual Data
Direct Materials
Direct Labor
Variable Overhead
Fixed Overhead
Units produced (actual)

Florimene

Glyoxide

3 kilograms at
$1 per kilogram
5 hours at
$4 per hour
$3.20
$22,356
5,750

4 kilograms at
$1.10 per kilogram
6 hours at
$5 per hour
$3.50
$26.520
7,800

3,100 kilograms at
$.90 per kilogram
4,900 hours at
$4.05 per hour
$16,170
$20,930
1,000 units

4,700 kilograms at
$1.15 per kilogram
7,400 hours at
$5.10 per hour
$25,234
$26,400
1,200 units

Required:
Prepare a variance analysis for each cost for each product.