The accountants at Value Vases developed the following standards for producing exquisite vases from a liquid silicate:
Question:
The accountants at Value Vases developed the following standards for producing exquisite vases from a liquid silicate:
Direct materials……………………….2.5 gallons @ $5 per gallon
Direct labor. ……………………………3.5 hours @ $15 per hour
Variable overhead……………………$10.00 per direct labor hour
Fixed overhead……………………….$5.00 per direct labor hour
Value’s volume of direct labor hours for normal costing is 1,680 each month. In a recent month, Value produced 500 vases and incurred the following costs:
Direct materials purchased & used………………1,200 gallons @ $6 per gallon
Direct labor…………………………………………1,700 hours @ $14 per hour
Variable overhead……………………………………………………….$15,000
Fixed overhead…………………………………………………………...$8,500
Calculate the following variances.
1. Direct material price variance
2. Direct material efficiency variance
3. Direct labor price variance
4. Direct labor efficiency variance
Horngrens Accounting
ISBN: 978-0133855388
10th Canadian edition Volume 2
Authors: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura, Carol A. Meissner, Jo-Ann L. Johnston, Peter R. Norwood