Problem E $(15$ points$)$

The following standards were set by the industrial engineering department of Thirty Corporation:

Direct material

Direct labor Variable overhead Fixed overhead

$54,000$ units are produced and the following costs are recorded:

NOTE: WHERE APPLICABLE USE $()$ TO INDICATE AN UNFAVORABLE VARIANCE $(26,400)$

Determine the Direct material $-$ price variance $(5$ points$)$

$=AQ(AP-SP),AP=\frac{308,000}{140,000}=2\mathrm{.}2$

$=132,000(2\mathrm{.}2-2),SP=\frac{5}{7\mathrm{.}5}=2$

$=26400,$

$6,0002.$ Determine the Direct$-$material usage or quantity variance $(5$ points$)$

$=SP(AQ-5Q)$

$AQ=2\mathrm{.}5054,000=735,000$

$=2(135,000-132,000)$

$SQ=140,0+2(0,-50)=132,0w$

$=16,000$

$=135,0$

$31,000$

$3.$ Determine the Direct labor $-$ rate variance $(5$ points$)$

$=AH(AR-5R),AR=\frac{465,000}{62,000}=7\mathrm{.}5$

$=62,000(7\mathrm{.}5-8),SR=\frac{9\mathrm{.}6}{1\mathrm{.}2}=8$