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
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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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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