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Maggie Eddleman
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A business ecosystem is an economic community of organizations and all their stakeholders.
On Sep 28, 2024
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Lido Company's standard and actual costs per unit for the most recent period, during which 500 units were actually produced, are given below:
All of the materials purchased during the period were used in production during the period.
Required:From the foregoing information, compute the following variances. Indicate whether the variance is favorable (F) or unfavorable (U):a. Material price variance.b. Material quantity variance.c. Labor rate variance.d. Labor efficiency variance.e. Variable overhead rate variance.f. Variable overhead efficiency variance.
All of the materials purchased during the period were used in production during the period.Required:From the foregoing information, compute the following variances. Indicate whether the variance is favorable (F) or unfavorable (U):a. Material price variance.b. Material quantity variance.c. Labor rate variance.d. Labor efficiency variance.e. Variable overhead rate variance.f. Variable overhead efficiency variance.
On Sep 22, 2024
a. Actual quantity of materials used = 1.9 feet per unit × 500 units = 950 feetMaterials price variance = Actual quantity × (Actual price − Standard price)= 950 feet × ($1.60 per foot − $1.50 per foot)= 950 feet × ($0.10 per foot)= $95 Unfavorable
b. Materials quantity variance = (Actual quantity − Standard quantity) × Standard price= [950 feet − (2 feet per unit × 500 units)] × $1.50 per foot= [950 feet − 1,000 feet] × $1.50 per foot= −50 feet × $1.50 per foot= $75 Favorable
c. Actual direct labor-hours = 1.7 hours per unit × 500 units = 850 hoursLabor rate variance = Actual hours × (Actual rate − Standard rate)= 850 hours × ($6.30 per hour − $6.00 per hour)= 850 hours × ($0.30 per hour)= $255 Unfavorable
d. Labor efficiency variance = (Actual hours − Standard hours) × Standard rate= [850 hours − (1.5 hours per unit × 500 units)] × $6.00 per hour= [850 hours − 750 hours] × $6.00 per hour= [50 hours] × $6.00 per hour= $600 Unfavorable
e. Variable overhead rate variance = Actual hours × (Actual rate − Standard rate)= 850 hours × ($3.00 per hour − $3.40 per hour)= 850 hours × (−$0.40 per hour)= $340 Favorable
f. Variable overhead efficiency variance = (Actual hours − Standard hours) × Standard rate= (850 hours − 750 hours) × $3.40 per hour= (100 hours) × $3.40 per hour= $340 Unfavorable
b. Materials quantity variance = (Actual quantity − Standard quantity) × Standard price= [950 feet − (2 feet per unit × 500 units)] × $1.50 per foot= [950 feet − 1,000 feet] × $1.50 per foot= −50 feet × $1.50 per foot= $75 Favorable
c. Actual direct labor-hours = 1.7 hours per unit × 500 units = 850 hoursLabor rate variance = Actual hours × (Actual rate − Standard rate)= 850 hours × ($6.30 per hour − $6.00 per hour)= 850 hours × ($0.30 per hour)= $255 Unfavorable
d. Labor efficiency variance = (Actual hours − Standard hours) × Standard rate= [850 hours − (1.5 hours per unit × 500 units)] × $6.00 per hour= [850 hours − 750 hours] × $6.00 per hour= [50 hours] × $6.00 per hour= $600 Unfavorable
e. Variable overhead rate variance = Actual hours × (Actual rate − Standard rate)= 850 hours × ($3.00 per hour − $3.40 per hour)= 850 hours × (−$0.40 per hour)= $340 Favorable
f. Variable overhead efficiency variance = (Actual hours − Standard hours) × Standard rate= (850 hours − 750 hours) × $3.40 per hour= (100 hours) × $3.40 per hour= $340 Unfavorable