Question

What are the three major (vital) activities (according to your textbook) that managers carryout AND DEFINE each. (1 point for each activity and 1 point for its definition)

.

Phillips Chemical uses a standard cost system to account for the costs of its production of dillybobs. Standards are 1.4 gallons of materials at $105 per gallon and 10 hours of labor at a standard wage rate of $12. During September, Phillips Chemical produced 2,600 dillybobs. Phillips Chemical purchased and used totaled 3,560 gallons at a total cost of $381,180. Payroll totaled $302,730 for 25,430 hours worked. Calculate the following variances:

a. direct materials price variance
b. direct materials quantity variance
c. direct labor rate variance
d. direct labor efficiency variance

Answer 1

Std Material Quantity for actual output (2600*1.4):					3640	gallons
Std price perr gallon					$105
Actual quantity consumed					3560	gallons
Actual price per gallon (381180/3560):					107.07
Material price variance: Actual quantity (Std price -Actual price)
		3560 (105 -107.07 ) = $ 7380 Unfav
Material Quantity Variance: Std price per gallon (Std qty -Actual qty)
		105 (3640-3560) = $ 8400 Fav
Std labor hours for actual output (2600*10): 26000 hours
Std labor rate per hour: $ 12
Actual Labour hours Worked: 25430 hours
Actual labor rate per hour (302730/25430): $ 11.90 per hour
labour rate variance: Actual hours (Std rate- Actual rate)
	25430 (12-11.90 ) = $ 2430 Fav
Labour efficiency Variance: Std rate per hour (Std hours-Actual Hours)
		12 (26000-25430 )= $ 6840 Fav