Question

Vitex, Inc. manufactures a popular consumer product and it has provided the following data excerpts from its standard cost system: Inputs (1) Standard Quantity or Hours (2) Standard Price or Rate Standard Cost (1) × (2) Direct materials 6 pounds $3 per pound $ 18.00 Direct labor 0.8 hours $15 per hour 12.00 Variable manufacturing overhead 0.8 hours $3 per hour 2.40 Total standard cost per unit $32.40 Total Standard Cost* Variances Reported Price or Rate Quantity or Efficiency Direct materials $405,000 $6,900 F $9,000 U Direct labor $ 270,000 $14,550 U $21,000 U Variable manufacturing overhead $54,000 $1,300 F $? U *Applied to Work in Process during the period. The company’s manufacturing overhead cost is applied to production on the basis of direct labor-hours. All of the materials purchased during the period were used in production. Work in process inventories are insignificant and can be ignored.

Required:

How many units were produced last period?

How many pounds of direct material were purchased and used in production?

What was the actual cost per pound of material?

How many actual direct labor-hours were worked during the period?

What was the actual rate paid per direct labor-hour?

How much actual variable manufacturing overhead cost was incurred during the period?

Answer 1

a) No of units produced = 405000/18 = 22500 Units

b) Material quantity variance = (Standard qty-actual qty)Standard price

-9000 = (22500*6*3-3X)

3X = 405000+9000

X(Actual pounds) = 138000 Pounds

c) material price variance = (Standard price-actual price)actual qty

6900 = (3*138000-138000X)

138000X = 414000-6900

x(actual price) = 2.95

d) Labor efficiency variance = (Standard hour-actual hour)Standard rate

-21000 = (22500*.8*15-15X)

15X = 291000

X(actual hour) = 19400 Hour

e) Labor rate variance = (Standard rate-actual rate)actual hour

-14550 = (15*19400-19400X)

19400X = 305550

X(actual price) = 15.75

f) Variable overhead efficiency variance = (22500*.80-19400)*3 = 4200 U

Actual variable overhead = 54000+4200-1300 = 56900