Question

1. A company has the following information for Job Alpha during July:

Units produced	257
Actual materials used	1,722	lbs.
Actual materials cost	$         5.85	per lb.
Actual labor hours incurred	771
Actual labor rate	$      14.25	per hour
Work in process, July 1	$      4,000
Work in process, July 31	$             -

The company applies manufacturing overhead to jobs based on direct labor hours.

Additional information for the company in July is as follows:

Total estimated labor hours	2,170
Standard materials per unit	7	lbs.
Standard materials cost	$         5.50	per lb.
Standard labor hours per unit	2.80
Standard labor rate	$      15.00	per hour
Standard variable overhead	$         3.00	per labor hour
Standard fixed overhead	$         2.00	per labor hour
*based on 35,000 labor hours
Actual total output in units	755
Actual total labor hours	2,454
Actual variable overhead	$         3.40	per labor hour
Actual total fixed overhead	$      4,040

1. Calculate the direct materials flexible budget variance for Job Alpha in July:
2. Calculate the July materials price variance for Job Alpha:

2. Calculate the July materials quantity variance for Job Alpha:
3. Calculate the July direct labor flexible budget for Job Alpha :

Answer 1

req a.
Material flexible budget variance:
Std qty allowed for actual output	1799
Multiply: Std price			5.5
Std material cost			9894.5
Actual material cost	(1722*5.85)	10073.7
Material flexible budget variance:	179.2	Unfav
Req b.
Material price variance = Actual qty (Std price -Actual price)
		1722 (5.50-5.85) = 602.70 Unfav
Req c.
Material qty variance = std price (Std qty -Actual qty)
		5.50 (1799- 1722) = 423.50 Fav
Req d.
Labour flexible budget variance
Std hours allowed (257*2.80)		719.6
Multiply: Std rate			15
Std labour cost			10794
Actual labour cost	(771*14.25)	10986.75
Labour flexible budget variance		192.75	unfav