Question

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		7.80	liters	$	7.40	per liter
Direct labor		0.40	hours	$	25.70	per hour
Variable manufacturing overhead		0.40	hours	$	6.30	per hour

The company has reported the following actual results for the product for September:

Actual output		10,000	units
Raw materials purchased		78,500	liters
Actual cost of raw materials purchased	$	586,500
Raw materials used in production		78,020	liters
Actual direct labor-hours		3,800	hours
Actual direct labor cost	$	100,302
Actual variable overhead cost	$	20,314

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.

Answer 1

	in $
Ans 1 Materials Price Variance A	$5600	Unfavorable
(AQ*AP)-(AQ*SP)
586500-(78500*7.4)
ans 2 Materials Quantity Variance B	148	Unfavorable
SP*(AQ-SQ allowed)
7.4*(78020-(10000*7.8))
ans 3
Direct Labor Rate Variance C	2642	Unfavorable
(AH*AR)-(AH*SR)
100302-(3800*25.7)
labor efficiency variance	5140	Favorable
SR*(AH-ShH allowed)
25.7*(3800-(10000*.4))	-5140
ans 5
variable overhead rate variance	3626	Favorable
(AH*AVR)-(AH*SVR)
20314-(3800*6.3)	-3626
variable overhead efficiency variance	1260	Favorable
SR*(AH-ShH allowed)
6.3*(3800-(10000*.4))	-1260
If any doubt please comment
If satisfied you can rate