The Wolf Company uses a standard cost accounting system and estimates production for the year to be 60,000 units. At this volume, the company's variable overhead costs are $0.50 per direct labor hour.
The company's single product has a standard cost of $30.00 per unit. Included in the $30.00 are $13.20 for direct materials (3 yards) and $12.00 of direct labor (2 hours) and $4.80 for overhead. The company's variable overhead costs are $0.50 per direct labor hour.
Production information for the month of March follows:
Number of units produced 4,500 Materials purchased (13,300 yards) $61,600 Materials used in production (yards) 13,300 Variable overhead costs incurred $4,380 Fixed overhead costs incurred $20,400 Direct labor cost incurred ($6.50/hour) $57,750 Variances Materials price variance $3,080U Materials efficiency variance 880F Labor price variance 2,310U Labor efficiency variance 1,440U Variable OH price variance 240F Variable OH efficiency variance 120U Fixed OH price variance 1,400U Fixed OH volume variance 1,900U
Required:
In the chart above, the fixed overhead variances are given. Provide the calculations to prove those numbers.
Fixed OH price variance:
Fixed OH volume variance:
The Wolf Company uses a standard cost accounting system and estimates production for the year to be 60,000 units. At this volume, the company's variable overhead costs are $0.50 per direct labor hour.
The company's single product has a standard cost of $30.00 per unit. Included in the $30.00 are $13.20 for direct materials (3 yards) and $12.00 of direct labor (2 hours) and $4.80 for overhead. The company's variable overhead costs are $0.50 per direct labor hour.
Production information for the month of March follows:
Number of units produced 4,500 Materials purchased (13,300 yards) $61,600 Materials used in production (yards) 13,300 Variable overhead costs incurred $4,380 Fixed overhead costs incurred $20,400 Direct labor cost incurred ($6.50/hour) $57,750 Variances Materials price variance $3,080U Materials efficiency variance 880F Labor price variance 2,310U Labor efficiency variance 1,440U Variable OH price variance 240F Variable OH efficiency variance 120U Fixed OH price variance 1,400U Fixed OH volume variance 1,900U
Required:
In the chart above, the fixed overhead variances are given. Provide the calculations to prove those numbers.
Fixed OH price variance:
Fixed OH volume variance:
Related questions
Direct Materials, Direct Labor, and Factory Overhead CostVariance Analysis
Eastern Polymers, Inc., processes a base chemical into plastic.Standard costs and actual costs for direct materials, direct labor,and factory overhead incurred for the manufacture of 5,200 units ofproduct were as follows:
| Standard Costs | Actual Costs | ||
| Direct materials | 6,800 lbs. at $5.1 | 6,700 lbs. at $5 | |
| Direct labor | 1,300 hrs. at $17.9 | 1,330 hrs. at $18.2 | |
| Factory overhead | Rates per direct labor hr., | ||
| based on 100% of normal | |||
| capacity of 1,360 direct | |||
| labor hrs.: | |||
| Variable cost, $4.1 | $5,280 variable cost | ||
| Fixed cost, $6.5 | $8,840 fixed cost | ||
Each unit requires 0.25 hour of direct labor.
a. Determine the direct materials pricevariance, direct materials quantity variance, and total directmaterials cost variance.
| Price variance | $ | |
| Quantity variance | $ | |
| Total direct materials cost variance | $ |
b. Determine the direct labor rate variance,direct labor time variance, and total direct labor costvariance.
| Rate variance | $ | |
| Time variance | $ | |
| Total direct labor cost variance | $ |
c. Determine variable factory overheadcontrollable variance, the fixed factory overhead volume variance,and total factory overhead cost variance.
| Variable factory overhead controllable variance | $ | |
| Fixed factory overhead volume variance | $ | |
| Total factory overhead cost variance | $ |
Vitalite, Inc., produces a number ofproducts, including a body-wrap kit. Standard variable costsrelating to a single kit are given below:
| StandardQuantity or Hours | StandardPrice or Rate | Standard Cost | ||
| Direct materials | ? | $5per yard | $ ? | |
| Direct labor | ? | ? | ? | |
| Variable manufacturing overhead | ? | $4 perdirect labor-hour | ? | |
| Total standard cost per kit | $46 | |||
| | ||||
During August, 500 kits weremanufactured and sold. Selected information relating to themonth%u2019s production is given below: |
| MaterialsUsed | DirectLabor | Variable Manufacturing Overhead | ||
| Total standard cost* | ? | $8,500 | $1,700 | |
| Actual costs incurred | $12,000 | ? | $1,720 | |
| Materials price variance | ? | |||
| Materials quantity variance | $ 2,200 U | |||
| Labor rate variance | ? | |||
| Labor efficiency variance | ? | |||
| Variable overhead rate variance | ? | |||
| Variable overhead efficiency variance | ? | |||
| *For the month'sproduction. |
| The followingadditional information is available for August%u2019s production ofkits: |
| Actual direct labor-hours | 450 | |
| Difference between standard and actual cost per kitproduced during August | $.16 | U |
| Required: | |
| 1. | What was the total standard cost ofthe materials used during August? (Omit the "$" sign in yourresponse.) |
| Standard cost | $ |
| 2. | How many yards of material arerequired at standard per kit? (Do not round intermediatecalculations. Round your final answer to 2 decimalplaces.) |
| Number of yards | yards per kit |
| 3. | What was the materials pricevariance for August if there were no beginning or endinginventories of materials? (Input all amounts as positivevalues. Do not round intermediate calculations. Leave no cellsblank - be certain to enter "0" wherever required. Indicate theeffect of each variance by selecting "F" for favorable, "U" forunfavorable, and "None" for no effect (i.e., zero variance). Omitthe "$" sign in your response.) |
| Material price variance | $ |
| 4. | What is the standard direct laborrate per hour? (Omit the "$" sign in yourresponse.) |
| Standard direct labor rate | $ | perDLH |
| 5. | What was the labor rate variance forAugust? The labor efficiency variance? (Input all amounts as positivevalues. Do not round intermediate calculations. Leave no cellsblank - be certain to enter "0" wherever required. Indicate theeffect of each variance by selecting "F" for favorable, "U" forunfavorable, and "None" for no effect (i.e., zero variance). Omitthe "$" sign in your response.) |
| Labor rate variance | $ | |
| Labor efficiency variance | $ |
| 6. | What was the variable overhead ratevariance for August? The variable overhead efficiency variance?(Input all amountsas positive values. Do not round intermediate calculations. Leaveno cells blank - be certain to enter "0" wherever required.Indicate the effect of each variance by selecting "F" forfavorable, "U" for unfavorable, and "None" for no effect (i.e.,zero variance). Omit the "$" sign in your response.) |
| Variable overhead rate variance | $ | |
| Variable overhead efficiency variance | $ |
| 7. | Complete the standard cost card forone kit shown at the beginning of the problem. (Do not round intermediatecalculations. Round your answers to 2 decimalplaces. Omit the "$" sign in your response.) |
| StandardQuantity or Hours | Standard Price or Rate | StandardCost | |||
| Direct materials | yards | $5per yard | $ | ||
| Direct labor | hours | $ per hour | |||
| Variable manufacturing overhead | hours | $4 per directlabor-hour | |||
| Total standard cost per kit | $46 | ||||
| | |||||
Vitalite, Inc., produces a number of products, including abody-wrap kit. Standard variable costs relating to a single kit aregiven below: |
| StandardQuantity or Hours | StandardPrice or Rate | Standard Cost | ||
| Directmaterials | ? | $6.00 peryard | $ ? | |
| Direct labor | ? | ? | ? | |
| Variable manufacturingoverhead | ? | $2.00 perdirect labor-hour | ? | |
| Total standard costper kit | $46.80 | |||
During August, 530 kits weremanufactured and sold. Selected information relating to the monthâsproduction is given below: |
| MaterialsUsed | DirectLabor | Variable Manufacturing Overhead | ||
| Total standardcost* | ? | $7,420 | $1,484 | |
| Actual costsincurred | $14,100 | ? | $1,570 | |
| Materials pricevariance | ? | |||
| Materials quantityvariance | $ 1,020 U | |||
| Labor ratevariance | ? | |||
| Labor efficiencyvariance | ? | |||
| Variable overheadrate variance | ? | |||
| Variable overheadefficiency variance | ? | |||
| *For the month'sproduction. |
| The following additionalinformation is available for Augustâs production of kits: |
| Actual directlabor-hours | 880 | |
| Difference betweenstandard and actual cost per kit produced during August | $0.20 | U |
| Required: |
| 1. | What was the total standard cost of the materials used duringAugust?
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| 5. | What was the labor rate variance for August? The laborefficiency variance? (Do not round your intermediatecalculations. Indicate the effect of each variance by selecting "F"for favorable, "U" for unfavorable, and "None" for no effect (i.e.,zero variance)) | ||||||||||||
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| 6. | What was the variable overhead rate variance for August? Thevariable overhead efficiency variance?(Do not roundintermediate calculations. Indicate the effect of each variance byselecting "F" for favorable, "U" for unfavorable, and "None" for noeffect (i.e., zero variance)) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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