Question

# Vitex, Inc. manufactures a popular consumer product and it has provided the following data excerpts from...

Vitex, Inc. manufactures a popular consumer product and it has provided the following data excerpts from its standard cost system:

 Inputs (1) Standard Quantity or Hours (2) Standard Price or Rate Standard Cost (1) × (2) Direct materials 6 pounds \$3 per pound \$ 18.00 Direct labor 0.8 hours \$15 per hour 12.00 Variable manufacturing overhead 0.8 hours \$3 per hour 2.40 Total standard cost per unit \$32.40 Total Standard Cost* Variances Reported Price or Rate Quantity or Efficiency Direct materials \$405,000 \$6,900 F \$9,000 U Direct labor \$ 270,000 \$14,550 U \$21,000 U Variable manufacturing overhead \$54,000 \$1,300 F \$? U *Applied to Work in Process during the period.

The company’s manufacturing overhead cost is applied to production on the basis of direct labor-hours. All of the materials purchased during the period were used in production. Work in process inventories are insignificant and can be ignored.

Required:

1. How many units were produced last period?

2. How many pounds of direct material were purchased and used in production?

3. What was the actual cost per pound of material?

4. How many actual direct labor-hours were worked during the period?

5. What was the actual rate paid per direct labor-hour?

6. How much actual variable manufacturing overhead cost was incurred during the period?

1. No. Of units produced last period = Total Std.Cost / unit std cost = \$405,000/18 =22,500 units

2. Computation of pounds of DM purchased and used in production

Standard DM cost \$405,000

Total actual cost of DM used \$414,000

Std price of DM per pound \$3

Pounds of DM purchased and used \$414000/3 = 138000

3. Computation of actual cost per pound of material

Total actual cost of DM used \$414000

Add Favourable DM. Price variance \$6900

\$420,900

Pounds of DM purchased and used 138000

Actual. Cost of DM per pound = 420,900/138,000 = 3.05

4. Total std cost DL \$270,000

Total actual cost of DL used \$291,000

Std rate of DL. Per hr \$12

Actual DLH used \$291000/12 = 24,250

5. Computation of actual rate paid per DLH

Labour rate variance =(SR - AR) AH

-14550 = 12*24250 -24250X

24,250X = 305,550

X (AR)= 12.6

6. VOH efficiency variance = (22500-24250)*2.4 =4200U

Actual VOH = 54000-1300+4200 = 56,900