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Ravena Labs., Inc. makes a single product which has the following standards: Direct material............ 2.5 ounces at $20 per ounce Direct labor.......... 1.4 hours at $12.50 per hour Variable manufacturing overhead..... 1.4 hours at $3.50 per hour Variable manufacturing overhead is applied on the basis of direct labor hours. The following data are available for October: 3,750 units of compound were produced during the month. There was no beginning direct materials inventory. . The ending direct materials inventory was 2,000 ounces. Direct materials purchased: 12,000 ounces for $225,000. Direct labor hours worked: 5,600 hours at a cost of $67,200. Variable manufacturing overhead costs incurred amounted to $18,200. Required: Compute the following variances and mark the variance (Favorable by F or Unfavorable by U) 1. Direct materials price variance 2. Direct materials quantity variance 3. Direct labor rate variance

Ravena Labs., Inc. makes a single product which has the following standards: Direct material............ 2.5 ounces at $20 per ounce Direct labor.......... 1.4 hours at $12.50 per hour Variable manufacturing overhead..... 1.4 hours at $3.50 per hour Variable manufacturing overhead is applied on the basis of direct labor hours. The following data are available for October: 3,750 units of compound were produced during the month. There was no beginning direct materials inventory. . The ending direct materials inventory was 2,000 ounces. Direct materials purchased: 12,000 ounces for $225,000. Direct labor hours worked: 5,600 hours at a cost of $67,200. Variable manufacturing overhead costs incurred amounted to $18,200. Required: Compute the following variances and mark the variance (Favorable by F or Unfavorable by U) 1. Direct materials price variance 2. Direct materials quantity variance 3. Direct labor rate variance

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Ravena Labs., Inc. makes a single product which has the following standards: Direct materials. 2.5 ounces at $20 per ounce Direct labor. 1.4 hours at $12.50 per hour Variable manufacturing overhead.. 1.4 hours at $3.50 per hour Variable manufacturing overhead is applied on the basis of direct labor hours. The following data are available for October: 3,750 units of compound were produced during the month. There was no beginning direct materials inventory. The ending direct materials inventory was 2,000 ounces. Direct materials purchased: 12,000 ounces for $225,000. Direct labor hours worked: 5,600 hours at a cost of $67,200. Variable manufacturing overhead costs incurred amounted to $18,200. Required: Compute the following variances and mark the variance (Favorable by F or Unfavorable by U) 1. Direct materials price variance 2. Direct materials quantity variance 3. Direct labor rate variance . .
Transcribed Image Text:Ravena Labs., Inc. makes a single product which has the following standards: Direct materials. 2.5 ounces at $20 per ounce Direct labor. 1.4 hours at $12.50 per hour Variable manufacturing overhead.. 1.4 hours at $3.50 per hour Variable manufacturing overhead is applied on the basis of direct labor hours. The following data are available for October: 3,750 units of compound were produced during the month. There was no beginning direct materials inventory. The ending direct materials inventory was 2,000 ounces. Direct materials purchased: 12,000 ounces for $225,000. Direct labor hours worked: 5,600 hours at a cost of $67,200. Variable manufacturing overhead costs incurred amounted to $18,200. Required: Compute the following variances and mark the variance (Favorable by F or Unfavorable by U) 1. Direct materials price variance 2. Direct materials quantity variance 3. Direct labor rate variance . .
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