Question

Vitex, Inc. manufactures a popular consumer product and it has provided the following data excerpts from its standard cost system:

Inputs	(1) Standard Quantity or Hours		(2) Standard Price or Rate			Standard Cost (1) × (2)
Direct materials	2.30	pounds	$	16.60	per pound	$	38.18
Direct labor	1.00	hours	$	15.70	per hour	$	15.70
Variable manufacturing overhead	1.00	hours	$	9.30	per hour	$	9.30
Total standard cost per unit						$	63.18

	Total		Variances Reported
	Standard Cost*		Price or Rate			Quantity or Efficiency
Direct materials	$	572,700	$	10,585	F	$	33,200	U
Direct labor	$	235,500	$	3,200	U	$	15,700	U
Variable manufacturing overhead	$	139,500	$	4,900	F	$	?†	U

*Applied to Work in Process during the period.

The company's manufacturing overhead cost is applied to production on the basis of direct labor-hours. All of the materials purchased during the period were used in production. Work in process inventories are insignificant and can be ignored.

Required:

1. How many pounds of direct material were purchased and used in production?

2. What was the actual cost per pound of material? (Round your answer to 2 decimal places.)

3. How much actual variable manufacturing overhead cost was incurred during the period?

Answer 1

Actual units = 572700/38.18 = 15000 Units

1) Material quantity variance = (Standard quantity-actual quantity)Standard rate

-33200 = (15000*2.3*16.60-16.60X)

16.60X = 572700+33200

Actual pound of material purchased and used = 36500 Pounds

2) Material price variance = (Standard price-actual price)actual quantity

10585 = (16.60*36500-36500X)

36500X = 605900-10585

X(actual cost per pound) = 16.31 per pound

3) labor efficiency variance= (Standard hour-actual hour)Standard rate

-15700 = (15000*15.7-15.70X)

15.70X = 251200

X(actual hour) = 16000 hour

Variable overhead efficiency variance = (15000-16000)*9.3 = 9300 U

Actual variable overhead = 139500+4400 = $143900