Question

Use the following information to answer the next six questions. Kartman Corporation makes a product with the following standard costs: Standard Quantity Standard Cost or Hours Standard Price or Rate Per Unit Direct materials 6.5 pounds $ 7.00 per pound $ 45.50 Direct labor 0.6 hours $ 24.00 per hour $ 14.40 Variable overhead 0.6 hours $ 4.00 per hour $ 2.40 In June the company's budgeted production was 3.400 units but the actual production was 3,500 units. The company used 22,150 pounds of the direct material and 2,290 direct labor-hours to produce this output. During the month the company purchased 25.400 pounds of the direct material at a cost of $170,180. The actual direct labor cost was $57,021 and the actual variable overhead cost was $8,931. The company applies variable overhead on the basis of direct labor-hours. 12) The materials quantity variance for June is: A) $4,200 F B) $4,200 U C) $4,020 U D) $4,020 F 13) The materials price variance for June is: A) $7,620 U B) $6,825 U C) $6,825 F D) $7,620 F 14) The labor efficiency variance for June is: A) $4,560 F B) $4,560 U C) $4,731 U D) $4,731 F 15) The labor rate variance for June is: A) $1,890 F B) $2,061 U C) $2,061 F D) $1,890 U

Answer 1

Solution In the given problem, following information is provided: Budgeted production for June month Actual production for June month Direct material Standard quantity allowed per unit Direct material Standard quantity allowed for actual production (6.5 pound x 3,500) Direct material Actual quantity used for actual production Direct material quantity purchased Direct Material standard Price per pound Direct Material actual Price per pound ($170,180 / 25,400 pounds) 3,400 units 3,500 units 6.5 pound 22,750 pounds 22,150 pounds 25,400 pounds $7.00 per pound $6.70 per pound | Standard Direct labor hours allowed per unit Standard Direct labor hours allowed for actual production (0.60 hour x 3,500 units) Actual direct labor hours worked Direct labor standard rate per hour Direct labor Actual rate per hour ($57,021 /2,290 hours) 0.60 Hour 2,100 Hours 2,290 Hours $24.00 per hour $24.90 per hour Variable overhead Standard rate per direct labor hour Variable overhead Actual rate per direct labor hour ($8,931 / 2,290 hours) $4.00 per hour $3.90 per hour Material Price variance Direct Material Price variance = (Actual Price - Standard Price) x Quanity purchased = ($6.70 - $7.00) x 25,400 Pounds = $7,620 (F) Material Quantity variance Direct Material Quantity variance = (Actual quantity used - Standard quantity) Standard price = (22,150 pounds - 22,750 pounds) x $7.00 = $4,200 (F) Labor rate variance Direct Labor rate variance = (Actual rate - standard rate) x Actual labor hours worked = ($24.90 - $24.00) x 2,290 hours = $2,061 (U) Labor efficiency variance Direct Labor efficiency variance = (Actual hours - Standard hours) x standard rate = (2,290 hours - 2,100 hours) $24.00 = $4,560 (U)

Variable overhead rate variance Variable O/H rate variance = (Actual rate-standard rate) x Actual labor hours worked = ($3.90 - $4.00) x 2,290 hours = $229 (F) Variable overhead efficiency variance Variable O/H efficiency variance = (Actual hours - Standard hours) x standard rate = (2,290 hours - 2,100 hours) x $4.00 = $760 (U) Question #12 The materials quantity variance for June is: A) 4,200 F Question #13 The materials price variance for June is: D) $7,620 F Question # 14 The labor efficiency variance for June is: B) $4,560 U Question # 15 The labor rate variance for June is: B) $2,061 U Question #16 The variable overhead efficiency variance for June is: B) $760 U Question #17 The variable overhead rate variance for June is: B) $229 F