SOLUTION
Chapter 11 Waterways Continuing Problem
WCP11
(a)
Materials Price Variance
Actual Quantity
X Actual Price
less
Actual Quantity
X Standard Price
229,000 lbs
229,000 lbs
X
X
(b)
Materials Quantity Variance
less
Standard Quantity
X Standard Price
231,000*
X
F
*115,500 units X 2 lbs = 231,000
less
(c)
Total Materials Variance
Actual Quantity
X Actual Price
less
Standard Quantity
X Standard Price
229,000 lbs
231,000*
X
X
(d)
Labor Price Variance
Actual Hours
X Actual Rate
less
Actual Hours
X Standard Rate
34,650 hrs*
34,650 hours
X
F
*115,500 units X .30 hrs = 34,650 hrs
(e)
Labor Quantity Variance
Actual Hours
X Standard Rate
less
Standard Hours
X Standard Rate
34,650 hours
28,875*
X
X
$8.00
less
= $6,180
F
(f)
Total Labor Variance
Actual Hours
X Actual Rate
Less
Standard Hours
X Standard Rate
34,650 hrs
28,875*
X
X
(g)
Total Overhead Variance
Actual Overhead
Overhead Applied*
$128,473
= $4,888
U
*Based on standard hours allowed for 115,500 units, 115,500 X .25 hrs = 28,875 hours)
(h) The labor quantity variance is a concern. Perhaps the labor is not as skilled as it should
be. The actual price paid for labor suggests less skill, so it could take workers longer to
complete each unit. Or the materials may not meet the proper standard, causing the
workers to take longer to complete a unit. It could also mean the machinery being used
less
= $39,270
U