Question

Total Per Set of Covers Direct materials $ 26,964 $ 12.60 Direct labor $ 11,770 5.50 Variable manufacturing overhead (based on direct labor-hours) $ 3,638 1.70 $ 19.80 During August, the factory worked only 1,000 direct labor-hours and produced 2,400 sets of covers. The following actual costs were recorded during the month: Total Per Set of Covers Direct materials (6,000 yards) $ 29,280 $ 12.20 Direct labor $ 13,680 5.70 Variable manufacturing overhead $ 5,760 2.40 $ 20.30 At standard, each set of covers should require 1.5 yards of material. All of the materials purchased during the month were used in production. Required: 1. Compute the materials price and quantity variances for August. 2. Compute the labor rate and efficiency variances for August. 3. Compute the variable overhead rate and efficiency variances for August. (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.)

Answer 1

Since the budgeted hours are not given in the question, I have assumed that the actual hours and budgeted hours are equal i.e. 1000 hours. You can change the calculation by changing the budgeted number of hours.