Question

Wooten Company produced 6,000 book bags in June, and actual amounts were as follows: 

Wooten's standards were as follows: 

Requirements

 1. Compute cost and efficiency variances for direct materials, direct labor, and variable overhead. 

2. Compute the cost and volume variances for fixed overhead. 

Answer 1

		Standard (1 unit)				Standard (6000 units)				Actual (6000 units)
		Qty/ Hour	Price/ Rate	Amount		Qty/ Hour	Price/ Rate	Amount		Qty/ Hour	Price/ Rate	Amount
Direct Material		2	$        2.40	$      4.80		12000	$        2.40	$ 28,800.00		12500	$      2.40	$ 30,000.00
Direct Labor		0.5	$      14.30	$      7.15		3000	$      14.30	$ 42,900.00		2600	$    14.00	$ 36,400.00
V.OH		0.5	$        2.20	$      1.10		3000	$        2.20	$   6,600.00		2600	$      2.19	$   5,700.00

Direct Material Cost Variance	=	(Standard Price - Actual Price) x Actual Quantity
	=	($ 2.4 - $ 2.4) x 12500
	=	$             -
Direct Material Effi Variance	=	(Standard Quantity - Actual Quantity) x Standard Price
	=	(12000 - 12500) x $ 2.4
	=	$ 1,200.00	(U)
Direct Labor Cost Variance	=	(Standard Rate - Actual Rate) x Actual Hours
	=	($ 14.3 - $ 14) x 2600
	=	$    780.00	(F)
Direct Labor Effi Variance	=	(Standard Hours - Actual Hours) x Standard Rate
	=	(3000 - 2600) x $ 14.3
	=	$ 5,720.00	(F)
VOH cost variance	=	(Standard Rate - Actual Rate) x Actual Hours
	=	($ 2.2 - $ 2.19) x 2600
	=	$      20.00	(F)
VOH efficiency variance	=	(Standard Hours - Actual Hours) x Standard Rate
	=	(3000 - 2600) x $ 2.2
	=	$    880.00	(F)