Kropf Inc. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours.
| Inputs | Standard Quantity or Hours per Unit of Output | Standard Price or Rate | |||||||||
| Direct materials |
9.10 |
liters | $ | 8.70 | per liter | ||||||
| Direct labor | 0.60 | hours | $ | 38.70 | per hour | ||||||
| Variable manufacturing overhead | 0.60 | hours | $ | 7.60 | per hour | ||||||
The company has reported the following actual results for the product for September:
| Actual output | 11,300 | units | |
| Raw materials purchased | 104,700 | liters | |
| Actual cost of raw materials purchased | $ | 929,500 | |
| Raw materials used in production | 102,860 | liters | |
| Actual direct labor-hours | 6,500 | hours | |
| Actual direct labor cost | $ | 255,302 | |
| Actual variable overhead cost | $ | 44,414 | |
Required:
a. Compute the materials price variance for September.
b. Compute the materials quantity variance for September.
c. Compute the labor rate variance for September.
d. Compute the labor efficiency variance for September.
e. Compute the variable overhead rate variance for September.
f. Compute the variable overhead efficiency variance for September.
(Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
a. Material price variance = (Standard price - actual price)*actual quantity
= (8.70-929500/104700)*104700 = $18610 Unfavorable
b. Material quantity variance = (Standard quantity - actual quantity)*standard rate
= (11300*9.10-102860)*8.70 = $261 Unfavorable
c. Labor rate variance = (standard rate - actual rate)*actual hours
= (38.70-255302/6500)*6500= $3752 Unfavorable
d. Labor efficiency variance = (standard hours - actual hours)*standard rate
= (11300*0.60-6500)*38.70 = $10836 Favorable
e. Variable overhead rate variance = (standard rate - actual rate)*actual hours
= (7.60-44414/6500)*6500 = $4986 Favorable
f. Variable overhead efficiency variance = (standard hours - actual hours)*standard rate
= (11300*0.60-6500)*7.60 = $2128 Favorable
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