Instructions: Data 1. Compute the price and quantity variances for direct materials. 2. Compute the rate and efficiency variances for direct labor. 3. Compute the variable overhead spending and efficiency variances. 4. Compute the fixed overhead budget and volume variances.
Instructions: Data 1. Compute the price and quantity variances for direct materials. 2. Compute the rate and efficiency variances for direct labor. 3. Compute the variable overhead spending and efficiency variances. 4. Compute the fixed overhead budget and volume variances.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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Transcribed Image Text:Rogen Corporation manufactures a single product. The standard cost per unit of product is shown below.
Direct materials 1 pound plastic at $7.00 per pound
Direct labor-1.6 hours at $12.00 per hour
Variable manufacturing overhead (1.6 hours at ?)
Fixed manufacturing overhead (1.6 hours at ?)
Total standard cost per unit
The predetermined manufacturing overhead rate was computed from a master manufacturing overhead
budget based on normal production of 8,000 direct labor hours (5,000 units) for the month. Actual costs for
October in producing 4,900 units were as follows.
Direct materials (5,100 pounds)
$36,720
Direct labor (7,400 hours)
Variable overhead
Fixed overhead
Total manufacturing costs
$ 7.00
19.20
12.00
4.00
$42.20
92,500
59,700
21,000
$209,920
Instructions: Data
The purchasing department buys the quantities of raw materials that are expected to be used in production
each month. Raw materials inventories, therefore, can be ignored.
1. Compute the price and quantity variances for direct materials.
2. Compute the rate and efficiency variances for direct labor.
3. Compute the variable overhead spending and efficiency variances.
4. Compute the fixed overhead budget and volume variances.
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