Question

4. STANDARD COST SYSTEMS VARIANCE COMPUTATIONS Livingston Corporation recently implemented a standard cost system. The company's cost accountant has provided the following data to perform a variance analysis for May Standard Cost Information Direct Material Standard Price $12 per pound Standard Quantity Allowed Per Unit Direct Labor Standard Rate Standard Hours Allowed Per Unit Fixed Overhead Budgeted Normal Level of Production Variable Overhead Application Rate Fixed Overhead Application Rate ($24,000/12,000 units) Total Overhead Application Rate 4 pounds per unit $7 per hour 0.5 hours per unit $24,000 per month 12,000 units per month $1.80 per unit $2.00 per unit $3.80 per unit Actual Cost Information Cost of Material Purchased & Used $499.00 Pounds of Material Purchased & Used 39,000 pounds Cost of Direct Labor $23,100 Hours of Direct Labor Cost of Variable Overhead Cost of Fixed Overhead 4,200 hours $17,750 $24,200 Actual Volume of Production 10,400 units

Answer 1

* material price variance (standard price - actual price) 12 thus MPV is $10,400 actual qunatity 10400 favourable materials quantity variance (standard quantity - actual quantity)* standard price standard quantity 41600 pounds actual quantity 39000 pounds standard price 12 per pound MQV 31200 favourable labor rate variance (actual rate - standard rate)*actual quantity actual rate 2.221153846 per unit standard rate 3.5 per unit actual quantity 10400 units LRV -13300 favourable labor efficiency variance (standard quantity -actual quantity)*standard rate standard quantity 5200 hours for actual production actual quantity 4200 hours for actual production standarad rate 3.5 per labour hr LEV 3500 favourable overhead spending variance (actual quantity at standard rate) - actual spending of overhead AQ*SR 42720 (fixed +variable) actal spending 41950 (fixed +variable) OSV 770 favourable overhead volume variance FPOHR*(actual hours - standard hours)

overhead spending variance (actual quantity at standard rate) - actual spending of overhead AQ*SR 42720 (fixed +variable) actal spending 41950 (fixed +variable) OSV 770 favourable overhead volume variance FPOHR*(actual hours - standard hours) FPOHR is fixed portion of predetermined overhead rate FPOHR 24000 actual hours 2.476190476 per machine hr standard hours OW -24571.4286 favourable 39 3.5 40 41