Piedmont Manufacturing produces metal products with the following standard quantity and cost information: Overhead rates were based on normal monthly capacity of 3,600 machine hours. During November, the company produced only 510 units because of a labor strike, which occurred during union contract negotiations. After the dispute was settled, the company scheduled overtime to try to meet regular production levels. The following costs were incurred in November: a. Total material price variance $______ Unfavorable b. Total material usage (quantity) variance $______ Unfavorable c. Labor rate variance $540 Unfavorable d. Labor efficiency variance $______ Unfavorable e. Variable overhead spending variance $______ Favorable f. Variable overhead efficiency variance $______ Favorable g. Fixed overhead spending variance $______ Favorable h. Volume variance $______ Unfavorable i. Budget variance $______ Favorable
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.
Piedmont Manufacturing produces metal products with the following standard quantity and cost information:
During November, the company produced only 510 units because of a labor strike, which occurred during union contract negotiations. After the dispute was settled, the company scheduled overtime to try to meet regular production levels.
The following costs were incurred in November:
a. Total material price variance $______ Unfavorable
b. Total material usage (quantity) variance $______ Unfavorable
c. Labor rate variance $540 Unfavorable
d. Labor efficiency variance $______ Unfavorable
e. Variable overhead spending variance $______ Favorable
f. Variable overhead efficiency variance $______ Favorable
g. Fixed overhead spending variance $______ Favorable
h. Volume variance $______ Unfavorable
i.
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