Question

Bullseye Company manufactures dartboards. Its standard cost information follows:

	Standard Quantity		Standard Price (Rate)			Standard Unit Cost
Direct materials (cork board)	5.00	sq. ft.	$	2.70	per sq. ft.	$	13.50
Direct labor	1	hrs.	$	11.00	per hr.		11.00
Variable manufacturing overhead (based on direct labor hours)	1	hrs.	$	0.80	per hr.		0.80
Fixed manufacturing overhead ($26,250 ÷ 105,000 units)							0.25

Bullseye has the following actual results for the month of September:

Number of units produced and sold		85,000
Number of square feet of corkboard used		430,000
Cost of corkboard used	$	1,204,000
Number of labor hours worked		94,000
Direct labor cost	$	949,400
Variable overhead cost	$	73,000
Fixed overhead cost	$	57,000

Required:
1. Calculate the direct materials price, quantity, and total spending variances for Bullseye. (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.)



2. Calculate the direct labor rate, efficiency, and total spending variances for Bullseye.(Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.)



3. Calculate the variable overhead rate, efficiency, and total spending variances for Bullseye. (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable/Overapplied and "U" for unfavorable/underapplied.)

Answer 1

1

Direct materials price variance = 1204000-(430000*2.7)= $43000 U

Direct materials quantity variance = 2.7*(430000-85000*5)= $13500 U

Total spending variance = 43000+13500 = $56500 U

2

Direct labor rate variance = 949400-(94000*11)= $84600 F

Direct labor efficiency variance = 11*(94000-85000*1)= $99000 U

Total spending variance = 99000-84600= $14400 U

3

Variable overhead rate variance = 73000-(94000*0.80)= $2200 F

Variable overhead efficiency variance = 0.8*(94000-85000*1)= $7200 U

Total spending variance = 7200-2200 = $5000 U