Question

1)

Aday Frozen Food Favorites makes frozen dinners. They set the following standards for the production of 18,000 units:

Standard Quantity	72,000	lbs
Standard Price	$1.20	per lb
Standard Labor Hours	6,000	hours
Standard Labor Rate	$3.75
Standard Overhead Rate	$0.75	per hour

During the last period, Aday produced 14,520 units, and recorded the following information:

Actual Quantity Used	62,400	lbs
Actual Total Cost	$79,872	for 62,400 lbs
Actual Labor Hours	4,660	hours
Actual Labor Rate	$3.55
Actual Overhead Costs	$3,220

Using the information above, calculate the following:

What is the conversion factor:

Select one:

a. 0.81

b. 5,184.00

c. 4,992.00

d. (932.00)

2)

Aday Frozen Food Favorites makes frozen dinners. They set the following standards for the production of 18,000 units:

Standard Quantity	72,000	lbs
Standard Price	$1.20	per lb
Standard Labor Hours	6,000	hours
Standard Labor Rate	$3.75
Standard Overhead Rate	$0.75	per hour

During the last period, Aday produced 14,520 units, and recorded the following information:

Actual Quantity Used	62,400	lbs
Actual Total Cost	$79,872	for 62,400 lbs
Actual Labor Hours	4,660	hours
Actual Labor Rate	$3.55
Actual Overhead Costs	$3,220

Using the information above, calculate the following:

Quantity Variance

Select one:

a. (675.00)

b. 5,184.00

c. 4,992.00

d. (932.00)

3)

Aday Frozen Food Favorites makes frozen dinners. They set the following standards for the production of 18,000 units:

Standard Quantity	72,000	lbs
Standard Price	$1.20	per lb
Standard Labor Hours	6,000	hours
Standard Labor Rate	$3.75
Standard Overhead Rate	$0.75	per hour

During the last period, Aday produced 14,520 units, and recorded the following information:

Actual Quantity Used	62,400	lbs
Actual Total Cost	$79,872	for 62,400 lbs
Actual Labor Hours	4,660	hours
Actual Labor Rate	$3.55
Actual Overhead Costs	$3,220

Using the information above, calculate the following:

Price Variance

Select one:

a. (675.00)

b. 5,184.00

c. 4,992.00

d. (932.00)

Answer 1

1.

Conversion factor = Actual units / Standard units

Conversion factor = 14,520 / 18,000 = 0.81

Hence option a is correct.

2.

Quantity variance = (Standard quantity - Actual quantity) * Standard price

Standard quantity = 72,000 / 18,000 * 14,520 = 58,080 Ibs

Quantity variance = (58,080 - 62,400) * $1.20 = $5,184 Unfavorable

Hence option b is correct

3.

Price variance = (Standard price - Actual price) * Actual quantity

Actual price = $79,872 / 62,400 = $1.28 per Ibs

Price variance = ($1.20 - $1.28) * 62,400 = $4,992 Unfavorable

Hence option c is correct.