Question

# Lime Corporation makes a product with the following standard costs: Input Standard Quantity or Hours Standard...

Lime Corporation makes a product with the following standard costs:

 Input Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 9.5 grams \$6.00 per gram \$57.00 Direct labor 0.5 hours \$23.00 per hour \$11.50 Variable overhead 0.5 hours \$2.00 per hour \$1.00

In November the company's budgeted production was 3,000 units but the actual production and sales was 2,800 units. The company used 27,670 grams of the direct material and 1,390 direct labor-hours to produce this output. During the month, the company purchased 31,400 grams of the direct material at a cost of \$198,920. The actual direct labor cost was \$29,607 and the actual variable overhead cost was \$2,502.

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.

Required: Calculate the following variances for November:

a. Material price variance.

b. Material quantity variance.

c. Direct labor efficiency variance.

d. Direct labor rate variance.

 Standard Cost Sheet PU Component Qty Rate Price A Material Price Variance: Direct Material 9.5 6.00 57.00 (SP-AP)Actual Qty Purchased Direct Labor 0.5 23.00 11.50 (6-6.34)*31400 Variable OH 0.5 2.00 1.00 -10520 A 69.50 Actual Cost B Material Usage Variance: Component Qty Rate Price (Standard Qty-Actual Qty Used)Standard Cost Direct Material 31400 6.34 198920 (26600-27670)*6 Direct Labor 1390 21.30 29607 -6420 A Variable OH 1390 1.80 2502 -39,320.00 Total 231029 2,593.00 C Labor Price Variance: 298.00 (SP-AP)Actual Hours Standard Cost (2800) (23-21.30)*1390 Component Qty Rate Price 2363 Material 26600 6.00 159600 Labor 1400 23.00 32200 D Labor Eff Variance: VOH 1400 2.00 2800 (Standard Hours-Acual Hours)St. Price Total 194600 (1400-1390)*23 230 F Material Purchased 31400 E VOH Eff Variance: Total Purchase Value 198920 (Standard Hours-Acual Hours)St. Price Material Cost PU 6.34 (1400-1390)*2 20 F

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