
a)
Compute the material variance information:
a)

Explanation of Solution
Compute the material variance information:
Table (1)
b)
Compute the materials price and usage variance and identify whether it is unfavorable or favorable.
b)

Explanation of Solution
Compute the total materials price variances:
Hence the total materials price variances are $3,167.25 which is a unfavorable variance.
Compute the total materials usage variance:
Hence, the total materials usage variances are $2,781 which is an unfavorable variance.
c)
Compute the labor variance information:
c)

Explanation of Solution
Compute the labor variance information:
Table (2)
d)
Determine the labor price and usage variance and identify whether it is unfavorable or favorable.
Given information:
Refer part a) for the table information
d)

Explanation of Solution
Compute the labor price variance:
Hence, the labor price variance is $8,916 which is a unfavorable variance.
Compute the labor usage variance:
Hence, the labor usage variance is $28,320 which is a favorable variance.
e)
Determine the predetermined
e)

Explanation of Solution
Calculate the the predetermined overhead rate:
Hence, the predetermined overhead rate is $23.40 per unit.
f)
Compute the fixed cost spending and variance and specify whether it is unfavorable or favorable variance.
f)

Explanation of Solution
Compute the fixed cost spending variance:
Hence, the fixed cost spending variance is $36,000 which is the unfavorable variance
Compute the fixed cost volume variance:
Hence, the fixed cost spending variance is $21,060 which is the favorable variance as the company produced more units than actually planned which leads to decrease in fixed cost per unit
g)
Determine the gross margin of Company S
g)

Explanation of Solution
Determine the gross margin of Company S:
Table (3)
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Chapter 8 Solutions
Fundamental Managerial Accounting Concepts
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