Wisner Fabrication prepares its budgets on the basis of standard costs. Variances are analyzed and reported monthly. There are no materials inventories. The following information relates to the current period: Standard costs (per unit of output) Direct materials, 5 pounds @ $12.00 per pound Direct labor, 1.5 hours @ $30 per hour Factory overhead Variable (30% of material cost) Total standard cost per unit Actual costs and activities for the month follow: Materials used Output Actual labor costs Actual variable overhead Direct materials: Price variance Efficiency variance Direct materials total variance Direct labor: Price variance Efficiency variance Direct labor total variance Required: Prepare a cost variance analysis for the variable costs. Note: Round your answers to the nearest whole dollar amount. Indicate the effect of each variance by selecting "F" for favorab or "U" for unfavorable. If there is no effect, do not select either option. Variable overhead: Price variance $ 60 45 Efficiency variance Variable overhead total variance 18 $ 123 26,375 pounds at $ 12.55 per pound 5,350 units 9,240 hours at $ 33.50 per hour $ 97,290
Wisner Fabrication prepares its budgets on the basis of standard costs. Variances are analyzed and reported monthly. There are no materials inventories. The following information relates to the current period: Standard costs (per unit of output) Direct materials, 5 pounds @ $12.00 per pound Direct labor, 1.5 hours @ $30 per hour Factory overhead Variable (30% of material cost) Total standard cost per unit Actual costs and activities for the month follow: Materials used Output Actual labor costs Actual variable overhead Direct materials: Price variance Efficiency variance Direct materials total variance Direct labor: Price variance Efficiency variance Direct labor total variance Required: Prepare a cost variance analysis for the variable costs. Note: Round your answers to the nearest whole dollar amount. Indicate the effect of each variance by selecting "F" for favorab or "U" for unfavorable. If there is no effect, do not select either option. Variable overhead: Price variance $ 60 45 Efficiency variance Variable overhead total variance 18 $ 123 26,375 pounds at $ 12.55 per pound 5,350 units 9,240 hours at $ 33.50 per hour $ 97,290
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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Transcribed Image Text:Wisner Fabrication prepares its budgets on the basis of standard costs. Variances are analyzed and reported monthly. There are no
materials inventories.
The following information relates to the current period:
Standard costs (per unit of output)
Direct materials, 5 pounds @ $12.00 per pound
Direct labor, 1.5 hours @ $30 per hour
Factory overhead
Variable (30% of material cost)
Total standard cost per unit
Actual costs and activities for the month follow:
Materials used
Output
Actual labor costs
Actual variable overhead
Required:
Prepare a cost variance analysis for the variable costs.
Direct materials:
Price variance
Efficiency variance
Direct materials total variance
Direct labor:
Note: Round your answers to the nearest whole dollar amount. Indicate the effect of each variance by selecting "F" for favorable,
or "U" for unfavorable. If there is no effect, do not select either option.
Price variance
Efficiency variance
Direct labor total variance
Variable overhead:
Price variance
$ 60
45
Efficiency variance
Variable overhead total variance
18
$123
26,375 pounds at $ 12.55 per pound
5,350 units
9,240 hours at $33.50 per hour
$ 97,290
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