Chapter 9: Flex Budgeting and Variance Analysis Part 1

Glaab Inc. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours.

	Inputs	Standard Quantity or Hours per Unit of Output	Standard Price or Rate
	Direct materials	8.6 kilos	$6.00 per kilo
	Direct labor	0.40 hours	$11 per hour
	Variable manufacturing overhead	0.40 hours	$5 per hour

The company has reported the following actual results for the product for August:

	Actual output	8,400	Units
	Raw materials purchased and used	76,900	kilos
	Actual cost of raw materials purchased	$469,090
	Actual direct labor-hours	3,320	Hours
	Actual direct labor cost	$35,524
	Actual variable overhead cost	$17,928

Required:

1. Compute and interpret the materials price variance for August.
2. Compute and interpret the materials quantity variance for August.
3. Compute and interpret the labor rate variance for August.
4. Compute and interpret the labor efficiency variance for August.
5. Compute and interpret the variable overhead rate variance for August.
6. Compute and interpret the variable overhead efficiency variance for August.

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