Cascade Incorporated has provided the following information: Standards: Per Unit Direct materials 5.00 pounds @ $5.20 per pound $ 26.00 Direct labor 2 hours @ $12.67 per hour 41.00 Variable overhead (based on direct labor hours) 2 hours @ $27.00 per hour 54.00 Fixed overhead 10.00 Total $ 131.00 Budgeted production = 5,170 units Actual results: Direct materials 29,250 pounds @ $5.22 $ 152,685 Direct labor 11,920 @ $12.72 151,622 Variable overhead 142,420 Fixed overhead 146,300 Units produced 1,600 units Required: Calculate the direct materials price variance. Note: Do not round your intermediate calculations. Round your final answer to nearest dollar amount. Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance). Calculate the direct materials quantity variance. Note: Round your final answer to nearest dollar amount. Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance). Calculate the direct labor rate variance. Note: Do not round your intermediate calculations. Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance). Calculate the direct labor efficiency variance. Note: Do not round intermediate calculations and round your final answer to nearest dollar amount. Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance). Calculate the variable overhead rate variance. Note: Do not round your intermediate calculations. Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance). Calculate the variable overhead efficiency variance. Note: Do not round intermediate calculations and round your final answer to nearest dollar amount. Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance). Calculate the fixed overhead spending variance.
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.
Cascade Incorporated has provided the following information:
| Standards: | Per Unit | |
|---|---|---|
| Direct materials | 5.00 pounds @ $5.20 per pound | $ 26.00 |
| Direct labor | 2 hours @ $12.67 per hour | 41.00 |
| Variable |
2 hours @ $27.00 per hour | 54.00 |
| Fixed overhead | 10.00 | |
| Total | $ 131.00 |
Budgeted production = 5,170 units
| Actual results: | ||
|---|---|---|
| Direct materials | 29,250 pounds @ $5.22 | $ 152,685 |
| Direct labor | 11,920 @ $12.72 | 151,622 |
| Variable overhead | 142,420 | |
| Fixed overhead | 146,300 | |
| Units produced | 1,600 units |
Required:
- Calculate the direct materials price variance.
Note: Do not round your intermediate calculations. Round your final answer to nearest dollar amount. Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance).
- Calculate the direct materials quantity variance.
Note: Round your final answer to nearest dollar amount. Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance).
- Calculate the direct labor rate variance.
Note: Do not round your intermediate calculations. Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance).
- Calculate the direct labor efficiency variance.
Note: Do not round intermediate calculations and round your final answer to nearest dollar amount. Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance).
- Calculate the variable overhead rate variance.
Note: Do not round your intermediate calculations. Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance).
- Calculate the variable overhead efficiency variance.
Note: Do not round intermediate calculations and round your final answer to nearest dollar amount. Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance).
- Calculate the fixed overhead spending variance.
Note: Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance).
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