Galeazzi Corporation makes a product with the following standard costs:??Standard Quantity or HoursStandard Price or Rate?Direct materials 3.1 pounds $6.00 per pound?Direct labor0.8 hours$18.00 per hour?Variable overhead0.8 hours $6.00 per hourIn October the company produced 3,000 units using8,380 pounds of the direct material and 2,610 direct labor-hours. During the month, the company purchased 9,500 pounds of the direct material at a total cost of $55,100. The actual direct labor cost for the month was $48,546 and the actual variable overhead cost was $16,965. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.Required:a. Compute the materials quantity

Question

variance.b. Compute the materials price variance.c. Compute the labor efficiency variance.d. Compute the labor rate variance.e. Compute the variable overhead efficiency variance.f. Compute the variable overhead rate variance.

What will be an ideal response?

Answer 1

a. SQ = 3,000 units × 3.1 pounds per unit = 9,300 pounds
Materials quantity variance = (AQ - SQ) × SP
= (8,380 pounds - 9,300 pounds) × $6.00 per pound
= (-920 pounds) × $6.00 per pound
= $5,520 F

b. Materials price variance = (AQ × AP) - (AQ × SP)
= ($55,100) - (9,500 pounds × $6.00 per pound)
= $55,100 - $57,000
= $1,900 F

c. SH = 3,000 units × 0.8 hours per unit = 2,400 hours
Labor efficiency variance = (AH - SH) × SR
= (2,610 hours - 2,400 hours) × $18.00 per hour
= (210 hours) × $18.00 per hour
= $3,780 U

d. Labor rate variance = (AH × AR) - (AH × SR)
= ($48,546) - (2,610 hours × $18.00 per hour)
= $48,546 - $46,980
= $1,566 U

e. SH = 3,000 units × 0.8 hours per unit = 2,400 hours
Variable overhead efficiency variance = (AH - SH) × SR
= (2,610 hours - 2,400 hours) × $6.00 per hour
= (210 hours) × $6.00 per hour
= $1,260 U

f. Variable overhead rate variance = (AH × AR) - (AH × SR)
= ($16,965) - (2,610 hours × $6.00 per hour)
= $16,965 - $15,660
= $1,305 U