Venneman company produced 14,000 units of product that required 4 standard hours per unit.
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Venneman company produced 14,000 units of product that required 4 standard hours per unit.


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- Flexer Company Ltd has set the following standards for the production of one unit of product. Normal production each month is 500 units. Direct Material 8 lbs at $6.50 per lb $52 Direct Labour 4 hours at $7.00 per hour $28 During June, actual production amounted to 420 units. All direct material was purchased and used this month. The actual cost amounted to: Direct Material 3,500 lbs $21,875 Direct labor: 1,720 hours 12,212 1) the direct material quantity variance for June production is calculated to be: a. $35 U b. $875 U c. $910 U d. $875 F E. $3,250 FSpring, Incorporated manufactures two products. It currently has 1,000 hours of direct labor and 2,080 hours of machine time available per month. The following table lists the contribution margin, labor and machine time requirements, and demand for each product: Unit contribution margin Demand Labor time Machine time Product A $21 1, 040 units 3/4 hour 1 hour How much of each product should Spring manufacture per month? Product B $18 2,080 units 1 hour 1/2 hourVandalay Industries manufactures two products: toasters and blenders. The annual production and sales of toasters is 2200 units, while 1400 units of blenders are produced and sold. The company has traditionally used direct labor hours to allocate its overhead to products. Toasters require 1.25 direct labor hours per unit, while blenders require 1 direct labor hours per unit. The total estimated overhead for the period is $150,015. The company is looking at the possibility of changing to an activity-based costing system for its products. If the company used an activity-based costing system, it would have the following three activity cost pools: Expected activity Activity cost pool Estimatedoverheadcost Toasters Blenders Total Setup costs $8285 245 batches 390 batches 635 batches Engineering costs $70,980 900 engineering 800 engineering hours 1700 engineering hrs Maintenance costs $70,750 2730 direct labor hours 1295 direct labor hours 4025 direct labor hours Total…
- Henderson Manufacturing produces a product with the following standard costs: Direct materials: 3.5 liters per unit at $9.00 per liter Direct labor: 0.6 hours per unit at $18.50 per hour Variable overhead: 0.6 hours per unit at $6.50 per hour The company produced 3,800 units in June, using 13,600 liters of direct material and 2,320 direct labor hours. During the month, the company purchased 14,000 liters of direct material at $9.20 per liter. The actual direct labor rate was $18.80 per hour, and the actual variable overhead rate was $6.50 per hour. The company applies variable overhead on the basis of direct labor hours. The direct materials purchase variance is computed at the time of purchase. Compute the materials quantity variance for June.Thompson Industries manufactures a product with the following standard costs: • Direct materials: 3.8 grams per unit at $7.50 per gram • Direct labor: 0.5 hours per unit at $14.50 per hour • Variable overhead: 0.5 hours per unit at $3.50 per hour In August, the company produced 6,000 units, using 23,400 grams of direct material and 3,100 direct labor hours. During the month, the company purchased 23,000 grams of direct material at $7.30 per gram. The direct materials price variance is computed when materials are purchased, and variable overhead is applied based on direct labor hours. Compute the Direct Materials Quantity Variance.Julia Company produces a single product. The company has set the following standards for materials and labor: Standard quantity or hours per unit Standard price or rate Direct materials ? pounds per unit $ ? per pound Direct labor 3.0 hours per unit $ 10 per hour During the past month, the company purchased 7,000 pounds of direct materials at a cost of $17,500. All of this material was used in the production of 1,300 units of product. Direct labor cost totaled $36,750 for the month. The following variances have been computed: Materials quantity variance $ 1,375 U Total materials variance $ 375 F Labor efficiency variance $ 4,000 F Required:1. For direct materials:a. Compute the standard price per pound of materials.b. Compute the standard quantity allowed for materials for the month's production.c. Compute the standard quantity of materials…
- Blue Corporation's standards call for 3,000 direct labor-hours to produce 1,200 units of product. During May 1,000 units were produced and the company worked 1,100 direct labor-hours. The standard hours allowed for May production would be: A. 3,000 hours. B. 1,100 hours. C. 2,500 hours. D. 2,000 hours.Operating at a normal level of 30,000 direct labor-hours, Lasser Company produces 10,000 units of product each period. The direct labor wage rate is $12 per hour. Two and one-half yards of direct materials gointo each unit of product; the material costs $8.60 per yard. Variable manufacturing overhead should be$1.90 per standard direct labor-hour. Fixed manufacturing overhead should be $168,000 per period.Required:1. Using 30,000 direct labor-hours as the denominator activity, compute the predetermined overhead rateand break it down into variable and fixed elements.2. Complete the standard cost card below for one unit of product:Direct materials, 2.5 yards at $8.60 per yard ......................... $21.50Direct labor, ? ........................................................................ ?Variable manufacturing overhead, ? ...................................... ?Fixed manufacturing overhead, ? .......................................... ?Total standard cost per unit…Vandalay Industries manufactures two products: toasters and blenders. The annual production and sales of toasters is 2100 units, while 1600 units of blenders are produced and sold. The company has traditionally used direct labor hours to allocate its overhead to products. Toasters require 1.25 direct labor hours per unit, while blenders require 1 direct labor hours per unit. The total estimated overhead for the period is $149,315. The company is looking at the possibility of changing to an activity-based costing system for its products. If the company used an activity-based costing system, it would have the following three activity cost pools: Expected activity Activity cost pool Estimatedoverheadcost Toasters Blenders Total Setup costs $8585 215 batches 450 batches 665 batches Engineering costs $73,980 870 engineering 820 engineering hours 1690 engineering hrs Maintenance costs $66,750 2750 direct labor hours 1195 direct labor hours 3945 direct labor hours Total…
- Piper Corporation's standards call for 8,000 direct labor-hours to produce 2,000 units of product. During October the company worked 1,650 direct labor-hours and produced 1,650 units. The standard hours allowed for October would be:Phi Co. normally uses 40,000 direct labor hours for manufacturing 120,000 units of product. Three units are produced in one hour and the direct labor rate is Ph15 per hour. At normal capacity of 40,000 hours, the factory overhead is estimated as follows: Fixed overhead Ph 100,000 and variable overhead Ph120,000. If 30,000 direct labor hours are used, total factory overhead costs would amount to * Ph 165,000 Ph 190,000 Ph 195,000 Ph 220,000Sierra Water Corporation uses a standard cost system for the production of its transistors. The direct labor standard for each transistor is 0.9 hours. The standard direct labor cost per hour is $7.20. During the month of July, Sierra's transistors production used 6,600 direct labor-hours at a total direct labor cost of $46,708. This resulted in production of 6,900 transistors for July. What is Sierra's labor efficiency variance for July? A. $812 Favorable B. $1,188 Unfavorable C. $1,188 Favorable D. $2,808 Unfavorable