Majer Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit 6.5 ounces $ 2.00 per ounce $ 13.00 $18.00 per hour $14.40 $ 2.00 per hour $1.60 Direct materials Direct labor 0.8 hours Variable overhead 0.8 hours The company reported the following results concerning this product in February. Originally budgeted output Actual output Raw materials used in production Actual direct labor-hours Purchases of raw materials Actual price of raw materials Actual direct labor rate Actual variable overhead rate ** 4,600 units 5,300 units 30,500 ounces 2,110 hours 32,900 ounces $97.10 per ounce $ 87.60 per hour $6.10 per hour At 1 The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is comput hen the materials are purchased.
Majer Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit 6.5 ounces $ 2.00 per ounce $ 13.00 $18.00 per hour $14.40 $ 2.00 per hour $1.60 Direct materials Direct labor 0.8 hours Variable overhead 0.8 hours The company reported the following results concerning this product in February. Originally budgeted output Actual output Raw materials used in production Actual direct labor-hours Purchases of raw materials Actual price of raw materials Actual direct labor rate Actual variable overhead rate ** 4,600 units 5,300 units 30,500 ounces 2,110 hours 32,900 ounces $97.10 per ounce $ 87.60 per hour $6.10 per hour At 1 The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is comput hen the materials are purchased.
Chapter1: Financial Statements And Business Decisions
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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:Majer Corporation makes a product with the following standard costs:
Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit
6.5 ounces
$ 2.00 per ounce
$ 13.00
$14.40
$1.60
Direct materials
Direct labor 0.8 hours
Variable overhead 0.8 hours
$18.00 per hour
$ 2.00 per hour
The company reported the following results concerning this product in February.
Originally budgeted output
Actual output
Raw materials used in production
Actual direct labor-hours
Purchases of raw materials
Actual price of raw materials
Actual direct labor rate
Actual variable overhead rate
*-
4,600 units
5,300 units
30,500 ounces
2,110 hours
32,900 ounces
$97.10 per ounce
$ 87.60 per hour
$6.10 per hour
At
1
The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is comput
hen the materials are purchased.
Transcribed Image Text:Actual output
5,300 units
Raw materials used in production 30,500 ounces
2,110 hours
32,900 ounces
$97.10 per ounce
$87.60 per hour
$6.10 per hour
Actual direct labor-hours
Purchases of raw materials
Actual price of raw materials
Actual direct labor rate
Actual variable overhead rate
The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed
when the materials are purchased.
The variable overhead efficiency variance for February is:
O $4,260 Favorable
O $4,255 Favorable
O $4,260 Unfavorable
O $4,255 Favorable
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