Orion Corporation has established the following standards for the prime costs of one unit of its chief product, dartboards. Direct material Direct labor Total Standard Quantity 9.00 pounds 1.70 hour Standard Price or Rate $2.50 per pound $5.00 per hour Standard Cost $ 22.50 8.50 $ 31.00 During June, Orion purchased 223,000 pounds of direct material at a total cost of $588,720. The total wages for June were $241,428, 75 percent of which were for direct labor. Orion manufactured 22,000 dartboards during June, using 178,200 pounds of the direct material purchased in June and 40,920 direct-labor hours. Required: Compute the following variances for June. Note: Do not round intermediate calculations. Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "O" for no effect (i.e., zero variance).
Orion Corporation has established the following standards for the prime costs of one unit of its chief product, dartboards. Direct material Direct labor Total Standard Quantity 9.00 pounds 1.70 hour Standard Price or Rate $2.50 per pound $5.00 per hour Standard Cost $ 22.50 8.50 $ 31.00 During June, Orion purchased 223,000 pounds of direct material at a total cost of $588,720. The total wages for June were $241,428, 75 percent of which were for direct labor. Orion manufactured 22,000 dartboards during June, using 178,200 pounds of the direct material purchased in June and 40,920 direct-labor hours. Required: Compute the following variances for June. Note: Do not round intermediate calculations. Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "O" for no effect (i.e., zero variance).
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:Orion Corporation has established the following standards for the prime costs of one unit of its chief product, dartboards.
Direct material
Direct labor
Total
Standard Quantity
9.00 pounds
1.70 hour
Standard Price or Rate
$ 2.50 per pound
$5.00 per hour
Standard Cost
$ 22.50
8.50
$ 31.00
During June, Orion purchased 223,000 pounds of direct material at a total cost of $588,720. The total wages for June were $241,428,
75 percent of which were for direct labor. Orion manufactured 22,000 dartboards during June, using 178,200 pounds of the direct
material purchased in June and 40,920 direct-labor hours.
Required:
Compute the following variances for June.
Note: Do not round intermediate calculations. Indicate the effect of each variance by selecting "Favorable" or "Unfavorable".
Select "None" and enter "O" for no effect (i.e., zero variance).
1. Direct-material price variance
2. Direct-material quantity variance
3. Direct-material purchase price variance
4. Direct-labor rate variance
5. Direct-labor efficiency variance
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