# The roofing company manufactures shingles. Standard Cost Sheet per shingle 1.5 pounds \$0.07 per pound direct labor Direct materials Asphalt 0.01 hour \$11 per hour Direct labor Variable direct la...

The roofing company manufactures shingles. Standard Cost Sheet per shingle 1.5 pounds \$0.07 per pound direct labor Direct materials Asphalt 0.01 hour \$11 per hour Direct labor Variable direct labor Manufacturing \$2 per hour 0.01 hour overhead Fixed direct labor Manufacturing 0.01 hour \$10 per hour overhead Total standard cost per shingle \$60,000 600,000 Units 6000 direct labor hours Budgeted fixed manufacturing overhead for the period is Budgeted units to be produced Standard fixed manufacturing overhead based on expected capacity of The following information is available regarding the company's actual operations for the period. 530,000 Shingles produced Materials purchased: Asphalt 9 \$0.09 per pound 755,000 pounds 0 Materials used: 750,000 pounds 5,100 hours Asphalt Direct labor: \$13.00 per hour Manufacturing overhead incurred Variable \$11,322 26 \$2.22 VOH rate per direct labor hour \$59,700 Fixed 28
Required: Make sure you do not forget to label each variance U or F. You need to use cell references for your calculations 1. Calculate the direct materials price and quantity variance. Material price variance should be based on material purchased, since you want to isolate the variance as soon as possible. Material Quantity variance should be based on materials used, since this is monitoring the production efficiency Material purchase price variance Material Quantity variance 1 2. Calculate the direct labor rate and efficiency variances Labor rate variance Labor Efficiency variance 3. Variable manufacturing overhead spending and efficiency variances Variable overhead spending variance Variable overhead efficiency variance 4. Fixed manufacturing overhead budget variance. Fixed Manufacturing overhead budget variance 5. Pick out the two variances that you computed above that you think should be further investigated. Explain why you picked these 2 variances and what might be the possible cause of the variances.

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 Minus sign indicate Favorable variance. Measure Pound Standard price per Pound \$            0.07 Actual price per Pound \$            0.09 530000*1.5 Standard quantity in Pounds 795000 Actual quantity purchased in Pounds 755000 Actual quantity used in Pounds 750000 Actual price per Pound 0.09 Less Standard price per Pound -0.07 Difference 0.02 Multiply Actual quantity purchased in Pounds 755000 Material price variance \$        15,100 Indicate Unfavorable Actual quantity used in Pounds 750000 Less Standard quantity in Pounds -795000 Difference -45000 Multiply Standard price per Pound 0.07 Material quantity variance \$        (3,150) Indicate Favorable
 Minus sign indicate Favorable variance. Measure Hour Standard rate per Hour \$            11.00 Actual rate per Hour \$            13.00 530000*0.01 Standard labor Hours 5300 Actual labor Hours 5100 Actual rate per Hour 13.00 Less Standard rate per Hour -11.00 Difference 2.00 Multiply Actual labor Hours 5100 Labor rate variance \$          10,200 Indicate Unfavorable Actual labor Hours 5100 Less Standard labor Hours -5300 Difference -200 Multiply Standard rate per Hour 11.00 Labor efficiency variance \$          (2,200) Indicate Favorable
 Minus sign indicate Favorable variance. Measure Hour Standard variable overhead rate per Hour \$                2.00 Actual variable overhead rate per Hour \$                2.22 530000*0.01 Standard Hours 5300 Actual Hours 5100 Actual variable overhead rate per Hour 2.22 Less Standard variable overhead rate per Hour -2.00 Difference 0.22 Multiply Actual Hours 5100 Variable overhead spending variance \$              1,122 Indicate Unfavorable Actual Hours 5100 Less Standard Hours -5300 Difference -200 Multiply Standard variable overhead rate per Hour 2.00 Variable overhead efficiency variance \$               (400) Indicate Favorable
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