Fortes Inc. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours.InputsStandard Quantity or Hours per Unit of OutputStandard Price or RateDirect materials 8.0 ounces$6.10 per ounceDirect labor 0.60 hours$19.80 per hourVariable manufacturing overhead 0.60 hours$4.40 per hourThe company has reported the following actual results for the product for April: Actual output 5,600 unitsRaw materials purchased 48,200 ouncesActual cost of raw materials purchased$279,560 Raw materials used in production 44,810 ouncesActual direct labor-hours 3,150 hoursActual direct labor cost$64,890 Actual variable overhead cost$12,915 Required:a. Compute the

Question

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

What will be an ideal response?

Answer 1

a.
Materials price variance = (AQ × AP) ? (AQ × SP)
= $279,560 ? (48,200 ounces × $6.10 per ounce)
= $279,560 ? $294,020
= $14,460 F

b.
SQ = 5,600 units × 8.0 ounces per unit = 44,800 ounces
Materials quantity variance = (AQ × SP) ? (SQ × SP)
= (AQ - SQ) × SP
= (44,810 ounces - 44,800 ounces) × $6.10 per ounce
= 10 ounces × $6.10 per ounce
= $61 U

c.
Labor rate variance = (AH × AR) ? (AH × SR)
= $64,890 ? (3,150 hours × $19.80 per hour)
= $64,890 ? $62,370
= $2,520 U

d.
SH = 5,600 units × 0.60 hours per unit = 3,360 hours
Labor efficiency variance = (AH × SR) - (SH × SR)
= (AH - SH) × SR
= (3,150 hours - 3,360 hours) × $19.80 per hour
= (-210 hours) × $19.80 per hour
= $4,158 F

e.
Variable overhead rate variance = (AH × AR) ? (AH × SR)
= $12,915 ? (3,150 hours × $4.40 per hour)
= $12,915 ? ($13,860)
= $945 F

f.
SH = 5,600 units × 0.60 hours per unit = 3,360 hours
Variable overhead efficiency variance = (AH × SR) - (SH × SR)
= (AH - SH) × SR
= (3,150 hours - 3,360 hours) × $4.40 per hour
= (-210 hours) × $4.40 per hour
= $924 F