Question

WizzleCo produces bicycles. The following standard cost sheet has been developed from historical data:

Direct Materials 12 pounds @ $ 2.00 per pound

Direct Labor   2 DLH @ $15.00 per DLH

Variable MOH   1 MHR @ $10.00 per MHR

Fixed MOH   1 MHR @ $20.00 per MHR

Production was forecast to be 2,000 units, but only 1,950 were actually produced. 26,000 pounds of materials were purchased for $66,300. A total of 23,000 pounds of materials were used in production. Actual direct labor totaled 4,000 DLH, costing $48,000. Forecast variable overhead was $10,000, and forecast fixed overhead was $40,000. Actual variable overhead was $11,000. Actual fixed overhead was $38,000. Actual machine hours totaled 1,900 MHR.

16THE ANSWER IS e11. (5 POINTS) Calculate the direct materials price variance. ANSWER: __________________

17THE ANSWER IS e11. (5 POINTS) Calculate the direct materials usage variance. ANSWER: ___________________

18THE ANSWER IS e11. (5 POINTS) Calculate the direct labor efficiency variance. ANSWER: ___________________

19THE ANSWER IS e11. (5 POINTS) Calculate the direct labor rate variance. ANSWER: _________________

Answer 1

16.DIRECT MATERIAL PRICE VARIANCE = (STANDARD PRICE * ACTUAL QUANDITY) - (ACTUAL PRICE * ACTUAL QUANDITY) = (2 * 23000) - (58650) = 46000 - 58650 = 12650 ADVERSE

17.DIRECT MATERIAL USAGE VARIANCE = (STANDARD QUANDITY - ACTUAL QUANDITY) * STANDARD PRICE

= ( 12*1950 - 23000) * 2 = 800 FAVORABLE

18.DIRECT LABOUR EFFICIENCY VARIANCE = (STANDARD HOURS - ACTUAL HOURS) * STANDARD RATE =

(2*1950 - 4000) * 15 = 1500 ADVERSE

19.DIRECT LABOUR RATE VARIANCE = ( STANDARD RATE - ACTUAL RATE ) * ACTUAL HOURS

= (15 - 12) * 4000 = 12000 FAVOURABLE