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The following
variable cost standards have been set for product K.
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er as
During the month of May, 900 direct labor hours were actually worked and 500 units
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of product K were manufactured. The actual cost per unit manufactured during May
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was $0.28 higher than the standard cost.
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rs e
The following costs and variances information relates to the month of May:
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aC s
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ed d
ar stu
1. Total standard cost of materials used for actual production during May.
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Solution:
(1) Standard cost of materials used:
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*$84.00 standard cost per unit × 500 units
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er as
co
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o.
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Standard quantity of materials per unit = Standard cost of materials per
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unit/Standard cost of materials per pound
= $45.60/$12
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aC s
Total materials variance is made up of materials price variance and material quantity
variance.
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(4) Standard direct labor rate per hour:
In order to compute the standard direct labor rate per hour we need to compute the
standard direct labor hours first. Since variable manufacturing overhead cost is
based on direct labor hours, we can compute standard direct labor hours as follows:
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co
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o.
rs e
Standard direct labor rate per hour = Total standard direct labor for May/Total
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standard direct labor hours for May
= $16,000/800 hours
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aC s
(Actual hours worked × Actual direct labor rate) – (Actual hours worked × Standard
direct labor rate)
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= $18,900 – $18,000
= $900 Unfavorable
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* Total actual cost – (Actual materials cost + Actual variable overhead cost)
= 42,140 – 23,240
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= $18,900
**See requirement 4
(Actual hours worked × Standard direct labor rate) – (Standard hours allowed ×
Standard direct labor rate)
= $18,000 – $16,000
= $2,000 Unfavorable
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*See requirement 4
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(6) Variable overhead variances:
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o.
(Actual hours worked × Actual variable overhead rate) – (Actual hours worked ×
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Standard variable overhead rate)
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= $3,240 – (900 hours × $4)
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=$3,240 – $3,600
aC s
vi y re
= $360 Favorable
= $3,600 – $3,200
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= $400 Unfavorable
Th
sh
This study source was downloaded by 100000771169325 from CourseHero.com on 05-19-2021 23:06:33 GMT -05:00
https://www.coursehero.com/file/70136050/Problem-10-Comprehensive-variance-analysisdocx/
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