Question

ABC Company has set the following standards in order to produce one unit
of its single product:

                    standard quantity           standard price
direct materials     2.7 yards                  ?? per yard
direct labor         2 hours                    $14 per hour
variable overhead    2 hours                    ?? per hour

During August, ABC Company spent $133,770 to purchase direct materials and
had direct labor totaling $189,440. During August, ABC Company used 16,000
yards of direct materials in the production of units. ABC had 2,500 yards
of materials in its August 1 direct material inventory and had 1,200 yards
yards remaining in its direct materials inventory at August 31.

ABC Company reported the following variances for August:

  Direct material price variance ..............  $12,495 unfavorable
  Direct labor rate variance ..................  $24,240 unfavorable
  Total direct labor variance .................  $6,560 favorable
  Variable overhead spending variance .........  $1,900 unfavorable
  Variable overhead efficiency variance .......  $20,900 favorable

Calculate ABC Company's actual variable overhead cost for August.

Answer 1

raterial used opening stock & purchases. closing stock 16000 2500 i purichopa 1200 purchaus 14700 yards Actual price pen ont: 133770 89.1 133770 $9.1 pen yound 1700 Affeur site retthee Assume the company follow TFO rathod Actual cost of raterial 2500 x Stand and price + 13500xQ.1 Material price variance Standard price x Actual Quantity - Actual cast spx 16000 - [2500XGP + 13500X9.1] = - 12495 13500 VSP - 13500x9.) = -12095 13500 [SP-Q.1] =-12495 = -0.93 sp = 8.17

Total Labour variance : standard rate standard Howy - Actual Labows cost lux Standard Hours - 18 Quuo 6560 Standard Howrs = luooo Actual output - 14000 , 7000 units Labour Rate variance - (SR-AR) * Actual Howy lux Actual Howry - Isquno = -24240 Actual Howrs - 165200 14 = 11800 Hours variable over Head efficiency variance hool woux Standard = (standard Hours - Actual Hours & Sto Rare C10000 -11800) x Standard Rale pen HOW = 20900 9200 x Standard Rale per How? = 20900 standard rate por Howr =$9.5pen Hour tabour variable overhead spending variance- (standard Rate - Actual Rate) & Actual Hours 9.5x11800 - Acheia variabl overhead = -1900 Actual variable overhead = $114000