16-121
143. Thompson Company uses a standard cost system for its single product. The following
data are available:
Actual experience for the current year:
Standards per unit of product:
Required:
Compute the following variances for raw materials, direct labor, and variable overhead, assuming
that the price variance for materials is recognized at point of purchase:
a. Direct materials price variance.
b. Direct materials quantity variance.
c. Direct labor rate variance.
d. Direct labor efficiency variance.
e. Variable overhead rate variance.
f. Variable overhead efficiency variance.
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144. Fastic Corporation makes a product with the following standard costs:
The company reported the following results concerning this product in August.
The materials price variance is recognized when materials are purchased. Variable overhead is
applied on the basis of direct labor-hours.
Required:
a. Compute the materials quantity variance.
b. Compute the materials price variance.
c. Compute the labor efficiency variance.
d. Compute the direct labor rate variance.
e. Compute the variable overhead efficiency variance.
f. Compute the variable overhead rate variance.
16-125
145. Igel Corporation makes a product with the following standard costs:
The company reported the following results concerning this product in September.
The company applies variable overhead on the basis of direct labor-hours. The direct materials
purchases variance is computed when the materials are purchased.
Required:
a. Compute the materials quantity variance.
b. Compute the materials price variance.
c. Compute the labor efficiency variance.
d. Compute the direct labor rate variance.
e. Compute the variable overhead efficiency variance.
f. Compute the variable overhead rate variance.
16-127
146. Schlager Corporation makes a product with the following standard costs:
The company reported the following results concerning this product in August.
The company applies variable overhead on the basis of direct labor-hours. The direct materials
purchases variance is computed when the materials are purchased.
Required:
a. Compute the materials quantity variance.
b. Compute the materials price variance.
c. Compute the labor efficiency variance.
d. Compute the direct labor rate variance.
e. Compute the variable overhead efficiency variance.
e. Compute the variable overhead rate variance.
16-129
147. Leerar Corporation makes a product with the following standard costs:
In December the company produced 4,200 units using 34,870 ounces of the direct material and
1,900 direct labor-hours. During the month, the company purchased 39,700 ounces of the direct
material at a total cost of $111,160. The actual direct labor cost for the month was $35,530 and
the actual variable overhead cost was $3,990. The company applies variable overhead on the
basis of direct labor-hours. The direct materials purchases variance is computed when the
materials are purchased.
Required:
a. Compute the materials quantity variance.
b. Compute the materials price variance.
c. Compute the labor efficiency variance.
d. Compute the direct labor rate variance.
e. Compute the variable overhead efficiency variance.
f. Compute the variable overhead rate variance.
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148. Diamond Company produces a single product. The company has set the following
standards for materials and labor:
During the past month, the company purchased 7,000 pounds of direct materials at a cost of
$17,500. All of this material was used in the production of 1,300 units of product. Direct labor cost
totaled $36,750 for the month The following variances have been computed:
Required:
149. In the new cost management scheme of things, what are some of the disadvantages of the
traditional standard cost system (list at least four)?
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150. Slyman Manufacturing Inc. has developed the following standards for one of its products.
The materials are not substitutable.
The records for March showed the following actual results:
Required:
(1) Calculate the following variances:
(a) Material purchase price variance for material 1.
(b) Material quantity variance for material 1.
(c) Material purchase price variance for material 2.
(d) Material quantity variance for material 2.
(e) Labor rate variance.
(f) Labor efficiency variance.
2) Give at least one possible cause for each of the following variances:
(a) material 2 quantity variance.
(b) labor rate variance.
(c) labor efficiency variance.
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151. Ruth Industries developed the following standards for one of its products:
Actual results for September were:
Required:
(1) Calculate the following variances:
(a) Material purchase price variance.
(b) Material quantity variance.
(c) Labor rate variance.
(d) Labor efficiency variance.
(2) Why would it be inappropriate to calculate the Material price variance at the time the material
is used; might there be a situation when it might be all right to do so?
152. O’Malley Company manufactures a single product. The following standards have been
developed for it:
During May, the following actual activities occurred: Material purchased, 12,000 pounds for
$45,600; material used in the production of 2,000 units of product, 13,000 pounds; direct labor,
3,500 hours costing $56,000.
Required:
(1) Compute the following variances:
(a) material quantity variance.
(b) labor rate variance.
(c) labor efficiency variance.
2) Give one possible explanation for each of the 3 variances computed.