Vitex, Incorporated manufactures a popular consumer product and it has provided the following data excerpts from its standard cost system: Inputs (1) Standard Quantity or Hours (2) Standard Price or Rate Standard Cost (1) × (2) Direct materials 2.20 pounds $ 16.30 per pound $ 35.86 Direct labor 1.00 hours $ 15.80 per hour $ 15.80 Variable manufacturing overhead 1.00 hours $ 9.50 per hour $ 9.50 Total standard cost per unit $ 61.16 Total Variances Reported Standard Cost* Price or Rate Quantity or Efficiency Direct materials $ 681,340 $ 12,702 F $ 32,600 U Direct labor $ 300,200 $ 4,000 U $ 15,800 U Variable manufacturing overhead $ 180,500 $ 4,100 F $ ?† U *Applied to Work in Process during the period. The company's manufacturing overhead cost is applied to production on the basis of direct labor-hours. All of the materials purchased during the period were used in production. Work in process inventories are insignificant and can be ignored. Required: 4. How many actual direct labor-hours were worked during the period? 5. What was the actual rate paid per direct labor-hour? (Round your answer to 2 decimal places.) 6. How much actual variable manufacturing overhead cost was incurred during the period?
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.
Vitex, Incorporated manufactures a popular consumer product and it has provided the following data excerpts from its
| Inputs | (1) Standard Quantity or Hours | (2) Standard Price or Rate | Standard Cost (1) × (2) | ||
|---|---|---|---|---|---|
| Direct materials | 2.20 | pounds | $ 16.30 | per pound | $ 35.86 |
| Direct labor | 1.00 | hours | $ 15.80 | per hour | $ 15.80 |
| Variable manufacturing |
1.00 | hours | $ 9.50 | per hour | $ 9.50 |
| Total standard cost per unit | $ 61.16 |
| Total | Variances Reported | ||||
|---|---|---|---|---|---|
| Standard Cost* | Price or Rate | Quantity or Efficiency | |||
| Direct materials | $ 681,340 | $ 12,702 | F | $ 32,600 | U |
| Direct labor | $ 300,200 | $ 4,000 | U | $ 15,800 | U |
| Variable manufacturing overhead | $ 180,500 | $ 4,100 | F | $ ?† | U |
*Applied to Work in Process during the period.
The company's
Required:
4. How many actual direct labor-hours were worked during the period?
5. What was the actual rate paid per direct labor-hour? (Round your answer to 2 decimal places.)
6. How much actual variable manufacturing overhead cost was incurred during the period?
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