The standards for one case of Springfever Tonic are: Direct materials . . . . . .
Question:
The standards for one case of Springfever Tonic are:
Direct materials . . . . . . . . . . . . . . . . . . . . 6 lbs. @ $5.00/lb. = $30
Direct labor . . . . . . . . . . . . . . . . . . . . . . . 5 hrs. @ $12.00/hr. = 60
Variable overhead (based
on direct labor hours). . . . . . . . . . . . . . 5 hrs. @ $6.00/hr. = 30
During the week ended March 28, the following activity took place: 16,000 lbs. of raw materials were purchased for inventory at a cost of $4.95 per pound.
2,500 cases of finished product were produced.
15,600 lbs. of raw materials were used.
12,200 direct labor hours were worked at a total cost of $152,500.
$76,860 of actual variable overhead costs were incurred.
Required:
Calculate each of the following variances and provide plausible explanations for the results:
a. Price variance for raw materials purchased.
b. Raw materials usage variance.
c. Direct labor rate variance.
d. Direct labor efficiency variance.
e. Variable overhead spending variance.
f. Variable overhead efficiency variance.
Step by Step Answer:
Accounting What the Numbers Mean
ISBN: 978-0073527062
9th Edition
Authors: David H. Marshall, Wayne W. McManus, Daniel F. Viele,