16-138
16-139
148.
Ralston Corporation makes a product with the following standard costs:
Inputs
Standard
Quantity
or Hours
Standard
Price
or Rate
Standard
Cost
Per Unit
Direct
materials
6.9 liters
$5.00 per
liter
$34.50
Direct labor
0.3 hours
$17.00 per
hour
$5.10
Variable
overhead
0.3 hours
$6.00 per
hour
$1.80
The company reported the following results concerning this product in August.
Originally budgeted output
8,600 units
Actual output
8,400 units
Raw materials used in
production
58,330 liters
Actual direct labor-hours
2,310 hours
Purchases of raw materials
62,500 liters
Actual price of raw materials
$4.90 per liter
Actual direct labor rate
$17.10 per
hour
Actual variable overhead rate
$5.50 per hour
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.
16-140
16-141
149.
Pure Corporation makes a product with the following standard costs:
Standard
Quantity
or Hours
Standard
Price
or Rate
Standard
Cost
Per Unit
4.3 pounds
$6.00 per
pound
$25.80
0.7 hours
$20.00 per
hour
$14.00
0.7 hours
$2.00 per
hour
$1.40
The company reported the following results concerning this product in September.
Originally budgeted output
1,900 units
Actual output
1,700 units
Raw materials used in production
7,210
pounds
Purchases of raw materials
7,600
pounds
Actual direct labor-hours
1,260 hours
Actual cost of raw materials
purchases
$43,320
Actual direct labor cost
$25,578
Actual variable overhead cost
$2,394
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.
16-142
16-143
150.
Photo Corporation makes a product with the following standard costs:
Inputs
Standard
Quantity
or Hours
Standard
Price
or Rate
Direct materials
7.8 kilos
$1.00 per kilo
Direct labor
0.4 hours
$18.00 per
hour
Variable
overhead
0.4 hours
$3.00 per
hour
The company reported the following results concerning this product in August.
Actual output
8,500 units
Raw materials used in production
65,550
kilos
Purchases of raw materials
69,000
kilos
Actual direct labor-hours
3,410
hours
Actual cost of raw materials
purchases
$75,900
Actual direct labor cost
$66,495
Actual variable overhead cost
$9,889
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.
16-144
16-145
151.
Meera Corporation makes a product with the following standard costs:
Inputs
Standard
Quantity
or Hours
Standard
Price
or Rate
Direct materials
8.1 ounces
$3.00 per
ounce
Direct labor
0.5 hours
$18.00 per
hour
Variable
overhead
0.5 hours
$2.00 per hour
152.
Al-Shabad Company produces a single product. The company has set the following
standards for materials and labor:
Standard quantity
or
hours per unit
Standard
price
or rate
Direct
materials
? pounds per unit
$? per pound
Direct labor
3.0 hours per unit
$10 per hour
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:
Materials quantity variance
$1,375 U
Total materials variance
$375 F
Labor efficiency variance
$4,000 F
153.
16-150
154.
Market Manufacturing Inc. has developed the following standards for one of its products.
The materials are not substitutable.
Material 1
5 yards
$6/yard
$30
Material 2
6
pieces
$5/piece
$30
Direct labor
3 hours
$24/hour
$72
Total variable cost per
unit
$132
The records for March showed the following actual results:
Material 1
Purchased
10,000 yards for
$58,000
Used
9,500 yards
Material 2
Purchased
15,000 pieces for
$78,750
Used
12,100 pieces
Direct labor
5,900 hours for
$147,500
Units
produced
2,000 units
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:
16-152
155.
Easton Industries developed the following standards for one of its products:
Material
5 feet
$15/foot
$75
Labor
10 hours
$15/hour
150
Total variable cost
$225
Actual results for September were:
Units produced
12,000
Material
purchased
40,000 feet for $14.25/foot
Material used
70,000 feet
Direct Labor
119,500 hours at
$15.10/hour
16-154
156.
Megham Company manufactures a single product. The following standards have been
developed for it:
Direct Material
6 pounds
$4/pound
Direct Labor
2 hours
$15/hour