Question

1) Stefani Company has gathered the following information about its product.

Direct materials: Each unit of product contains 4.50 pounds of materials. The average waste and spoilage per unit produced under normal conditions is 1.50 pounds. Materials cost $3 per pound, but Stefani always takes the 5.00% cash discount all of its suppliers offer. Freight costs average $0.30 per pound.

Direct labor. Each unit requires 1.70 hours of labor. Setup, cleanup, and downtime average 0.20 hours per unit. The average hourly pay rate of Stefani’s employees is $13.10. Payroll taxes and fringe benefits are an additional $3.40 per hour.
Manufacturing overhead. Overhead is applied at a rate of $4.50 per direct labor hour.

Compute Stefani’s total standard cost per unit. (Round answer to 2 decimal places, e.g. 1.25.)

Total standard cost per unit

$

2) The following direct materials and direct labor data pertain to the operations of Laurel Company for the month of August.

Costs
Actual labor rate		$13	per hour
Actual materials price		$120	per ton
Standard labor rate		$12.50	per hour
Standard materials price		$124	per ton

Quantities
Actual hours incurred and used		4,900 hours
Actual quantity of materials purchased and used		2,000 tons
Standard hours used		4,960 hours
Standard quantity of materials used		1,990 tons

(a)

Compute the total, price, and quantity variances for materials and labor.

Total materials variance		$enter a dollar amount		select an option                                                          Neither favorable nor unfavorableUnfavorableFavorable
Materials price variance		$enter a dollar amount		select an option                                                          UnfavorableFavorableNeither favorable nor unfavorable
Materials quantity variance		$enter a dollar amount		select an option                                                          FavorableNeither favorable nor unfavorableUnfavorable
Total labor variance		$enter a dollar amount		select an option                                                          UnfavorableNeither favorable nor unfavorableFavorable
Labor price variance		$enter a dollar amount		select an option                                                          UnfavorableFavorableNeither favorable nor unfavorable
Labor quantity variance		$enter a dollar amount		select an option                                                          FavorableUnfavorableNeither favorable nor unfavorable

3 )Rogen Corporation manufactures a single product. The standard cost per unit of product is shown below.

Direct materials—1 pound plastic at $8.00 per pound		$ 8.00
Direct labor—1.0 hours at $11.90 per hour		11.90
Variable manufacturing overhead		5.50
Fixed manufacturing overhead		10.50
Total standard cost per unit		$35.90

The predetermined manufacturing overhead rate is $16.00 per direct labor hour ($16.00 ÷ 1.0). It was computed from a master manufacturing overhead budget based on normal production of 5,600 direct labor hours (5,600 units) for the month. The master budget showed total variable costs of $30,800 ($5.50 per hour) and total fixed overhead costs of $58,800 ($10.50 per hour). Actual costs for October in producing 4,300 units were as follows.

Direct materials (4,400 pounds)		$ 36,080
Direct labor (4,160 hours)		50,752
Variable overhead		49,534
Fixed overhead		21,066
Total manufacturing costs		$157,432

The purchasing department buys the quantities of raw materials that are expected to be used in production each month. Raw materials inventories, therefore, can be ignored.

(a)

Compute all of the materials and labor variances.

Total materials variance		$enter a dollar amount		select an option                                                          Neither favorable nor unfavorableUnfavorableFavorable
Materials price variance		$enter a dollar amount		select an option                                                          Neither favorable nor unfavorableFavorableUnfavorable
Materials quantity variance		$enter a dollar amount		select an option                                                          UnfavorableFavorableNeither favorable nor unfavorable
Total labor variance		$enter a dollar amount		select an option                                                          Neither favorable nor unfavorableUnfavorableFavorable
Labor price variance		$enter a dollar amount		select an option                                                          UnfavorableNeither favorable nor unfavorableFavorable
Labor quantity variance		$enter a dollar amount		select an option                                                          Neither favorable nor unfavorableUnfavorableFavorable

(b)

Compute the total overhead variance.

Total overhead variance

$enter the total overhead variance in dollars

Answer 1

1. Total standard cost per unit = $ 49.35 & workings are below:

Direct Material (DM) Pound per unit A 4.5 Less: Wastage & spoilage Direct Material in pound Price per pound Less: % discount on price 1.5 C-A-B D E-D*5% 0.15 F-D-E 2.85 Freight Cost Total Cost per pound G 0.3 H-F+G 3.15 Thus, DM per unit J- C*H 9.45 Direct Labor (DL) hrs per unit 1.7 Add: setup, clean & downtime K 0.2 Total Hrs per unit L J+K 1.9 Avg rate per hr M 13.1 Add: Tax& Other benefits 3.4 Total avg rate per hr Thus, DL per unit O M+N 16.5 P L*O 31.35 Manufacturing & Other OverHead (OH) Rate per direct labor 4.5 Thus, OH per unit R L*Q 8.55 Total Standard cost per unit Direct Material (DM) Direct Labor (DL) Overhead (OH) 9.45 31.35 R 8.55 Standard cost per unit 49.35

2. a. Material & Price variance details with F/U explanation as below: (all variance figures are in $)

3. a&b - Material, labor and Overhead variance calculations are as below:

Actual: Labor Rate A 13 120 в Material price 4900 Labor Hr с 2000 Material used D Standard: Labor Rate E 12.5 124 Material price F Labor Hr 4960 1990 Material used Н Total Material Variance -6760 Unfavorable (Actual price Actual quantity)-(Standard price*Standard quantity) (B*D)-(F*H) Because Actuals are less as compared to standard Material Price Variance (B-F)*D -8000 Unfavorable Because actual quantity used is more as compared to standard (Actual Price-Standard price)*Actual quantity Material Quantity Variance 1240 Favorable Because actual price is less as compared to standard (Actual Quantity-Standard Quantity) *Standard price (D-H)*F Total Labor Variance |(A*C)-(E*G) 1700 Unfavorable Because actuals are more as compared to standard (Actual Rate Actual Hrs)-(Standard Rate*Standard Hrs) Labor Rate Variance 2450 Unfavorable (A-E)*C (Actual Rate-Standard Rate)*Actual Hrs Because actual rate per hr is more as compared to standard Labor Quantity Variance -750 Favorable Because actual hrs spent are less as compared to standard (C-G)*E (Actual Hrs-Standard Hrs)*Standard Rate

Price per unit Unit Total Total divided by Unit Actual: A Labor Rate per unit 12.2 Material price per unit 8.2 12.2 4160 Labor Hr 4160 C 50752 8.2 4400 D Material used 4400 36080 11.52 4300 Variable Overhead 11.52 49534 4.9 4300 4,9 Fixed Overhead J 21066 Standard: Labor Rate per unit 11.9 Material price per unit F 11.9 5600 Labor Hr G 5600 66640 Material used 85600 н 5600 44800 Variable Overhead 5.5 5600 K 5.5 30800 Fixed Overhead 10.5 5600 10.5 58800 Total Material Variance (B*D)-(F*H) $(8,720.00) Unfavorable (Actual price Actual quantity)-(Standard price*Standard quantity) Because Actuals are less as compared to standard Material Price Variance (Actual Price-Standard price)*Actual quantity (B-F)*D $ 880.00 Favorable Because actual quantity used is less as compared to standard Material Quantity Variance (Actual Quantity-Standard Quantity) Standard price (D-H) F $(9,600.00) Unfavorable Because actual price is more as compared to standard Total Labor Variance |(A*C)-(E*G) $(15,888.00) Favorable (Actual Rate Actual Hrs)-(Standard Rate*Standard Hrs) Because actuals are less as compared to standard Labor Rate Variance $1,248.00 Unfavorable (A-E)*C (Actual Rate-Standard Rate) Actual Hrs Because actual rate per hr is more as compared to standard Labor Quantity Variance $(17,136.00) Favorable (C-G) E (Actual Hrs-Standard Hrs)*Standard Rate Because actual hrs spent are less as compared to standard Overhead Variance |((I+J)-(K+L))*C$ 1,747.20 Favorable (Actual Rate-Standard Rate) Actual Hrs Because total actual Spending is less as compared to standard