Fruit-n-Berries, Inc., manufactures a product called Fruta. The company uses a standard cost system and has established the following standards for one (1) unit of Fruta:

The following activities were recorded by the company relative to the production of Fruta:
a. The company produced 3,000 units during the month.
b. A total of 8,000 pounds of material were purchased at a cost of $46,000.
c. There was no beginning inventory of materials on hand to start the month; at the end of the month, 3,000 pounds of material remained in the warehouse unused.
d. The company employs 10 persons to work on the production of Fruta. During June, each worked an average of 160 hours at an average rate of $12.50 per hour.
e. Variable overhead is assigned to Fruta on a basis of direct labor hours. Variable overhead costs during the month totaled $3,600.
If management is anxious to determine the efficiency of the activities surrounding the production of Fruta,
(1) Compute the materials price and quantity variances;
(2) Compute the labor rate and efficiency variances;
(3) Compute the variable overhead spending and efficiency variances;
(4) Compute the total materials variance;
(5) Compute the total labor variance;
(6) Compute the total variable overhead variance;
(7) Compute the total variance and
(8) What would you recommend to management?

  • CreatedAugust 05, 2013
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