Problem 16-72 (Static) Variance Computations with Missing Data (LO 16-5, 6) The following information is provided to assist you in evaluating the performance of the production operations of Studio Company: Units produced (actual) 42,000 Master production budget Direct materials $132,000 Direct labor 112,000 Overhead 159,200 Standard costs per unit Direct materials $1.65 × 2 gallons per unit of output Direct labor $14 per hour × 0.2 hour per unit Variable overhead $11.90 per direct labor-hour Actual costs Direct materials purchased and used $150,960 (81,600 gallons) Direct labor 111,708 (8,560 hours) Overhead 163,200 (61% is variable) Variable overhead is applied on the basis of direct labor-hours. Required: Calculate all variable production cost price and efficiency variances and fixed production cost price and production volume variances. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)
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.
Problem 16-72 (Static) Variance Computations with Missing Data (LO 16-5, 6)
The following information is provided to assist you in evaluating the performance of the production operations of Studio Company:
| Units produced (actual) | 42,000 |
| Direct materials | $132,000 |
| Direct labor | 112,000 |
| 159,200 | |
| Direct materials | $1.65 × 2 gallons per unit of output |
| Direct labor | $14 per hour × 0.2 hour per unit |
| Variable overhead | $11.90 per direct labor-hour |
| Actual costs | |
| Direct materials purchased and used | $150,960 (81,600 gallons) |
| Direct labor | 111,708 (8,560 hours) |
| Overhead | 163,200 (61% is variable) |
Variable overhead is applied on the basis of direct labor-hours.
Required:
Calculate all variable production cost price and efficiency variances and fixed production cost price and production volume variances. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)
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