Question

Koontz Company manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May.

	Standard Cost per Unit						Actual Cost per Unit
Direct materials:
Standard: 1.90 feet at $4.00 per foot	$	7.60
Actual: 1.85 feet at $4.40 per foot							$	8.14
Direct labor:
Standard: 1.10 hours at $16.00 per hour		17.60
Actual: 1.15 hours at $15.40 per hour								17.71
Variable overhead:
Standard: 1.10 hours at $9.00 per hour		9.90
Actual: 1.15 hours at $8.60 per hour								9.89
Total cost per unit	$	35.10					$	35.74
Excess of actual cost over standard cost per unit				$	0.64

The production superintendent was pleased when he saw this report and commented: “This $0.64 excess cost is well within the 4 percent limit management has set for acceptable variances. It's obvious that there's not much to worry about with this product."

Actual production for the month was 17,500 units. Variable overhead cost is assigned to products on the basis of direct labor-hours. There were no beginning or ending inventories of materials.

Required:

2. How much of the $0.64 excess unit cost is traceable to each of the variances computed in (1) above.

3. How much of the $0.64 excess unit cost is traceable to apparent inefficient use of labor time?

How much of the $0.64 excess unit cost is traceable to each of the variances computed in (1) above. (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. Round your answers to 2 decimal places.)

Materials:
Price variance
Quantity variance
Labor:
Rate variance
Efficiency variance
Variable overhead:
Rate variance
Efficiency variance
Excess of actual over standard cost per unit

How much of the $0.64 excess unit cost is traceable to apparent inefficient use of labor time? (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. Do not round intermediate calculations. Round your final answers to 2 decimal places.)

Excess of actual over standard cost per unit
Less portion attributable to labor inefficiency:
Labor efficiency variance
Variable overhead efficiency variance
Portion due to other variances

Answer 1