STANDARD COSTING The following July information is for Kingston Company. Standards: Material 3.0 feet per unit @$ 4.20 per foot. Labor 2.5 hours per unit @ $ 7.50 per hour Actuals: Production 2,750 units produced during the month . Materials 8700 feet used, 9,000 feet purchased @ $4.50 per foot. Labor 7,000 direct labor hours @ 7.90 per hour 1. What is the material price variance ( calculated at point of purchase). a) $2700 U b) $2700 F c) $ 2610 F d) $ 2610 U 2. What is the material quantity variance ? a) $3105 F b)$1050F c) 3105 U d) 1890 U 3.What is the labor rate variance ? a) 3480 U b) 3480 F c) 2800 U d) 2800 F 4.What is the labor efficacy variance ? a)$ 1875 U b) $938 U c) $ 1875 U d) $ 1125 U
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.
The following July information is for Kingston Company.
Standards:
Material 3.0 feet per unit @$ 4.20 per foot.
Labor 2.5 hours per unit @ $ 7.50 per hour
Actuals:
Production 2,750 units produced during the month .
Materials 8700 feet used, 9,000 feet purchased @ $4.50 per foot.
Labor 7,000 direct labor hours @ 7.90 per hour
1. What is the material price variance ( calculated at point of purchase).
a) $2700 U
b) $2700 F
c) $ 2610 F
d) $ 2610 U
2. What is the material quantity variance ?
a) $3105 F
b)$1050F
c) 3105 U
d) 1890 U
3.What is the labor rate variance ?
a) 3480 U
b) 3480 F
c) 2800 U
d) 2800 F
4.What is the labor efficacy variance ?
a)$ 1875 U
b) $938 U
c) $ 1875 U
d) $ 1125 U
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