Question

VEGA COMPANY Standard Cost Card Product A Cost Element Standard Quantity Standard Price - Standard Cost Direct materials 4 pounds Direct labor 3 hours Manufacturing overhead 3 hours Actual results for 2016 are as follows: • 25 000 units of Product A were produced • Actual direct labor costs were $630,800 for 76.000 direct labor hours worked • Actual direct materials purchased and used during the year cost $283 500 for 105,000 pounds • Actual variable overhead incurred was $130,000 and actual fixed overhead incurred was $170.000 • STANDARD QUANTITY IN POUNDS IS 25.000 4 -104,000 POUNDS • STANDARD HOURS IS 26.000 378,000 DIRECT LABOR HOURS Instructions Using scratch paper, compute the following variances Input the answer along with either favorable or unfavorable in the chart for each variance. Do NOT use dollar signs. Amount Favorable or Unfavorable Variance Name Direct Materials Quantity Variance Direct Materials Price Varunce Total Direct Labor Variance Direct Labor Quantity Variance Total overhead variante

Answer 1

4.00 = SQ = 26000 X SQ 104000 Particulars Direct Material SP 104000 Аа 105000 AP 2.7 Material Price Variance (MPV) = (SP-AP) AQ >>MPV = 1 3 - 2.7 ) * | >>MPV = 31500.00 Favorable 105000 Material Quantity Variance (MQV) = ( SQ - AQ) SP >>MQV = ( 104000 - 105000) * 3 >>MQV = -3000.00 Unfavorable Note-1 SQ = Standard Quantity for Actual output SP = Standard Price per Raw material AQ = Actual Quantiity consumed AP = Actual Price per Raw material

SH = 26000 X SH 78000 Particulars Direct Labour 3.00 = SRL 8 78000 AHP 76000 AR 18.30 Labour Price Variance (LPV) = ( SR - AR ) AHP >>LPV = C 8 - 8.3 * >>LPV = -22800 Unfavorable 76000 Labour Quantity Variance (LQV) = ( SH - AHW) SR >>LQV = ( 78000 - 76000 ) * 8 >>LQV = 16000 Favorable Total Labour variance (TLV) = SH * SR - AHP * AR >>TLV = ( 78000 * 8 ) - ( 76000 * 8 >>TLV = -6800 Unfavorable ) Note-1 SH = Standard Hours per Actual Output SR = Standard Rate per Hour AHP = Actual Hours Paid AR = Actual Rate per Hour.