Exercise 11-6 (continued)
2.
Standard Hours Allowed
for Actual Output,
at Standard Rate
(SH × SR)
Actual Hours of Input,
at Standard Rate
(AH × SR)
Actual Hours of Input,
at Actual Rate
(AH × AR)
1,000 hours* ×
$10.00 per hour
= $10,000
900 hours ×
$10.00 per hour
= $9,000
$10,800
Labor efficiency variance
= $1,000 F
Labor rate variance
= $1,800 U
Spending variance = $800 U
*2,500 units × 0.4 hour per unit = 1,000 hours
Alternatively, the variances can be computed using the formulas:
Labor efficiency variance = SR (AH – SH)
= $10 per hour (900 hours – 1,000 hours)
= 1,000 F
Labor rate variance = AH (AR – SR)
= 900 hours ($12 per hour* – $10 per hour)
= $1,800 U
*10,800 ÷ 900 hours = $12 per hour
Problem 11-9 (45 minutes)
1. a.
Standard Quantity Allowed
for Actual Output,
at Standard Price
(SQ × SP)
Actual Quantity
of Input,
at Standard Price
(AQ × SP)
Actual Quantity
of Input,
at Actual Price
(AQ × AP)
20,000 pounds* ×
$2.50 per pound
= $50,000
19,800 pounds ×
$2.50 per pound
= $49,500
25,000 pounds ×
$2.95 per pound
= $73,750
Materials quantity
variance = $500 F
25,000 pounds ×
$2.50 per pound
= $62,500
Materials price variance
= $11,250 U
*5,000 ingots × 4.0 pounds per ingot = 20,000 pounds
Alternatively, the variances can be computed using the formulas:
Materials quantity variance = SP (AQ – SQ)
= $2.50 per pound (19,800 pounds – 20,000 pounds)
= $500 F
Problem 11-9 (continued)
1. c.
Standard Hours Allowed
for Actual Output,
at Standard Rate
(SH × SR)
Actual Hours of Input,
at Standard Rate
(AH × SR)
Actual Hours of Input,
at Actual Rate
(AH × AR)
1,500 hours* ×
$2.00 per hour
= $3,000
1,800 hours ×
$2.00 per hour
= $3,600
$4,320
Variable overhead
efficiency variance
= $600 U
Variable overhead
rate variance
= $720 U
Spending variance = $1,320 U
*5,000 ingots × 0.3 hours per ingot = 1,500 hours
Alternatively, the variances can be computed using the formulas:
Variable overhead efficiency variance = SR (AH – SH)
= $2.00 per hour (1,800 hours – 1,500 hours)
= $600 U
Variable overhead rate variance = AH (AR – SR)
= 1,800 hours ($2.40 per hour* – $2.00 per hour)
= $720 U
*$4,320 ÷ 1,800 hours = $2.40 per hour
