Question

# Material, Labor, and Variable Overhead Variances The following summarized manufacturing data relate to Kiosse Corporation’s May...

Material, Labor, and Variable Overhead Variances The following summarized manufacturing data relate to Kiosse Corporation’s May operations, during which 2,000 finished units of product were produced. Normal monthly capacity is 1,100 direct labor hours.

Standard Units Costs Total Actual Costs
Direct material
Standard (3 lb. @ \$2.00/lb.) \$6
Actual (6,200 lb. @ \$2.20/lb.) \$13,640
Direct labor
Standard (0.5 hr. @ \$14/hr.) \$7
Actual (980 hrs. @ \$13.70/hr.) 13,426
Standard (0.5 hr. @ \$4/hr.) \$2
Actual - 4,200
Total \$15 \$31,266

Assume that the 6,200 lb. of materials purchased were all used in producing the 2,000 completed units. Determine the materials price and efficiency variances, labor rate and efficiency variances, and variable overhead spending and efficiency variances.

Do not use negative signs with any of your answers. Next to each variance answer, select either "F" for Favorable or "U" for Unfavorable.

Materials Variances
Labor Variances

 Answer: Materials Variances 1)Actual cost \$13,640 2)Split cost (6,200 x \$2) \$12,400 3)Standard cost (\$3 x 2,000 units x \$2) \$12,000 Materials price (1 - 2) \$1,240 Unfavourable Materials efficiency (2-3) \$400 Unfavourable Labor Variances Actual cost \$13,426 Split cost (980 x \$14) \$13,720 Standard cost (0.5 x 2,000 units x \$14) \$14,000 Labor rate (1 - 2) \$294 Favourable Labor efficiency (2-3) \$280 Favourable Variable Overhead Variances Actual cost \$4,200 Split cost (\$4 x 980) \$3,920 Standard cost (0.5 x 2,000 units x \$4) \$4,000 Variable overhead spending (1 - 2) \$280 Unfavourable Variable overhead efficiency (2-3) \$80 Favourable