The following data are given for Taylor Company: Budgeted production 1,000 units Actual production 980 units Materials: Standard price per pound $2.00 Standard pounds per completed unit 12 Actual pounds purchased and used in production 11,800 Actual price paid for materials $23,000 Labor: Standard hourly labor rate $14.00 per hour Standard hours allowed per completed unit 4.5 Actual labor hours worked 4,560 Actual total labor costs $62,928 Overhead: Actual and budgeted fixed overhead $27,000 Standard variable overhead rate $3.50 per standard labor hour Actual variable overhead costs $15,500 Overhead is applied based on standard labor hours. Compute the direct materials price and quantity variances for Taylor Company.
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 data are given for Taylor Company:
| Budgeted production | 1,000 units |
| Actual production | 980 units |
| Materials: | |
| Standard price per pound | $2.00 |
| Standard pounds per completed unit | 12 |
| Actual pounds purchased and used in production | 11,800 |
| Actual price paid for materials | $23,000 |
| Labor: | |
| Standard hourly labor rate | $14.00 per hour |
| Standard hours allowed per completed unit | 4.5 |
| Actual labor hours worked | 4,560 |
| Actual total labor costs | $62,928 |
| Actual and budgeted fixed overhead | $27,000 |
| Standard variable overhead rate | $3.50 per standard labor hour |
| Actual variable overhead costs | $15,500 |
Overhead is applied based on standard labor hours.
Compute the direct materials price and quantity variances for Taylor Company.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 4 images
