Koontz Company manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May. Standard Cost per Unit Actual Cost per Unit 18.00 $ 3.85 Direct materials: Standard: 1.80 feet at $2.00 per foot Actual: 1.75 feet at $2.20 per foot Direct labor: Standard: 0.90 hours at $20.00 per hour Actual: 0.95 hours at $19.40 per hour Variable overhead: Standard: 0.90 hours at $6.40 per hour Actual: 0.95 hours at $6.00 per hour Total cost per unit $ 3.60 5.76 Excess of actual cost over standard cost per unit 18.43 5.70 $ 27.36 $ 27.98 $ 0.62 The production superintendent was pleased when he saw this report and commented: "This $0.62 excess cost is well within the 5 percent limit management has set for acceptable variances. It's obvious that there's not much to worry about with this product." Actual production for the month was 12,500 units. Variable overhead cost is assigned to products on the basis of direct labor-hours. There were no beginning or ending inventories of materials. Required: 1. Compute the following variances for May: a. Materials price and quantity variances. b. Labor rate and efficiency variances. c. Variable overhead rate and efficiency variances. 2. How much of the $0.62 excess unit cost is traceable to each of the variances computed in requirement 1. 3. How much of the $0.62 excess unit cost is traceable to apparent inefficient use of labor time?
Koontz Company manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May. Standard Cost per Unit Actual Cost per Unit 18.00 $ 3.85 Direct materials: Standard: 1.80 feet at $2.00 per foot Actual: 1.75 feet at $2.20 per foot Direct labor: Standard: 0.90 hours at $20.00 per hour Actual: 0.95 hours at $19.40 per hour Variable overhead: Standard: 0.90 hours at $6.40 per hour Actual: 0.95 hours at $6.00 per hour Total cost per unit $ 3.60 5.76 Excess of actual cost over standard cost per unit 18.43 5.70 $ 27.36 $ 27.98 $ 0.62 The production superintendent was pleased when he saw this report and commented: "This $0.62 excess cost is well within the 5 percent limit management has set for acceptable variances. It's obvious that there's not much to worry about with this product." Actual production for the month was 12,500 units. Variable overhead cost is assigned to products on the basis of direct labor-hours. There were no beginning or ending inventories of materials. Required: 1. Compute the following variances for May: a. Materials price and quantity variances. b. Labor rate and efficiency variances. c. Variable overhead rate and efficiency variances. 2. How much of the $0.62 excess unit cost is traceable to each of the variances computed in requirement 1. 3. How much of the $0.62 excess unit cost is traceable to apparent inefficient use of labor time?
Chapter5: Process Costing
Section: Chapter Questions
Problem 2PB: The following product costs are available for Kellee Company on the production of eyeglass frames:...
Related questions
Question
1a. Compute the following variances for May, materials price and quantity variances.
1b. Compute the following variances for May, labor rate and efficiency variances.
1c. Compute the following variances for May, variable
Transcribed Image Text:Koontz Company manufactures a number of products. The standards relating to one of these products are shown below, along with
actual cost data for May.
Standard Cost
per Unit
Actual Cost
per Unit
18.00
$ 3.85
Direct materials:
Standard: 1.80 feet at $2.00 per foot
Actual: 1.75 feet at $2.20 per foot
Direct labor:
Standard: 0.90 hours at $20.00 per hour
Actual: 0.95 hours at $19.40 per hour
Variable overhead:
Standard: 0.90 hours at $6.40 per hour
Actual: 0.95 hours at $6.00 per hour
Total cost per unit
$ 3.60
5.76
Excess of actual cost over standard cost per unit
18.43
5.70
$ 27.36
$ 27.98
$ 0.62
The production superintendent was pleased when he saw this report and commented: "This $0.62 excess cost is well within the 5
percent limit management has set for acceptable variances. It's obvious that there's not much to worry about with this product."
Actual production for the month was 12,500 units. Variable overhead cost is assigned to products on the basis of direct labor-hours.
There were no beginning or ending inventories of materials.
Required:
1. Compute the following variances for May:
a. Materials price and quantity variances.
b. Labor rate and efficiency variances.
c. Variable overhead rate and efficiency variances.
2. How much of the $0.62 excess unit cost is traceable to each of the variances computed in requirement 1.
3. How much of the $0.62 excess unit cost is traceable to apparent inefficient use of labor time?
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