PRACTICE TESTS – STANDARD COSTING

Fitzhugh Company

Fitzhugh Company has the following information available for the current year:

Standard:

Material 3.5 feet per unit @ $2.60 per foot

Labor 5 direct labor hours @ $8.50 per unit

Actual:

Material 95,625 feet used (100,000 feet purchased @ $2.50 per foot)

Labor 122,400 direct labor hours incurred per unit @ $8.35 per hour

25,500 units were produced

1. Compute the material purchase price and quantity variances.

2. Compute the labor rate and efficiency variances.

The Michigan Company has made the following information available for its production facility for the
month of June. Fixed overhead was estimated at 19,000 machine hours for the production cycle. Actual
machine hours for the period were 18,900, which generated 3,900 units.

Material purchased (80,000 pieces) $314,000

Material quantity variance $6,400 U

Machine hours used (18,900 hours)

VOH spending variance $50 U

Actual fixed overhead $60,000

Actual labor cost $40,120

Actual labor hours 5,900

Michigan’s standard costs are as follows:

Direct material 20 pieces @ $4 per piece

Direct labor 1.5 hours @ $6 per hour

Variable overhead

(applied on a machine hour basis) 4.8 hours @ $2.50 per hour

Fixed overhead

(applied on a machine hour basis) 4.8 hours @ $3 per hour

Determine the following items:

A . material purchase price variance

b. standard quantity allowed for material

c. total standard cost of material allowed

d. actual quantity of material used

e. labor rate variance

f. standard hours allowed for labor

g. total standard cost of labor allowed

h. labor efficiency variance

i. actual variable overhead incurred

j. standard machine hours allowed

k. variable overhead efficiency variance

l. budgeted fixed overhead

m. applied fixed overhead

n. fixed overhead spending variance

o. volume variance

p. total overhead variance