Hans Enterprises is a major bird feed producer. In June, the company produced 160 batches of crow bait. Each batch
Hans Enterprises is a major bird feed producer. In June, the company produced 160 batches of crow bait. Each batch weighs 1,000 pounds. To produce this amount of output, the company purchased and used 170,000 pounds of direct materials at a cost of $816,000. It also incurred $20,000 in direct labor costs for the 2,500 hours worked by employees on the crow decoy crew. General production expense at the crow bait factory in June total $4,200, of which $3,100 was considered fixed. Hans' standard cost information for each 1,000 pound lot of crow bait is as follows.
|Direct materials standard price||5.00||per pound|
|Standard quantity allowed per lot||1.025||pound|
|Direct labor standard rate||8.25||hourly|
|Standard hours allowed per group||15.00||direct working hours|
|Fixed overhead budget||3.300||her is|
|Normal production level||150||monthly parties|
|Variable overhead application rate||10.00||per party|
|Fixed overall application rate (3,300 ÷ 150 lots)||22.00||per party|
|Total overall application rate||32.00||per party|
A. Calculate material price and quantity variances.
Material price differences: 34000
Material quantity differences: (30000)
B. Calculate the labor rate and productivity variances.
Labor rate variances: 625
Efficiency differences: (825)
C. Calculate production overhead expenses and volume variances.
Overhead differences: 700
Overhead volume variances: 220
D. What might have caused these differences? Who can be responsible? What questions does this raise, and who can get the answers?