Mirabito 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 Rate?Direct materials5.0 grams$9.70 per gram?Direct labor0.30 hours$21.20 per hour?Variable manufacturing overhead0.30 hours$9.20 per hourThe company has reported the following actual results for the product for December:?Actual output6,000units?Raw materials purchased31,700grams?Actual price of raw materials$9.00per gram ?Actual cost of raw materials purchased$285,300??Raw materials used in production29,990grams?Actual direct labor-hours1,760hours?Actual direct labor rate$21.90per hour?Actual direct
labor cost$38,544??Actual variable overhead rate$8.80per hour?Actual variable overhead cost$15,488?Required:a. Compute the materials price variance for December.b. Compute the materials quantity variance for December.c. Compute the labor rate variance for December.d. Compute the labor efficiency variance for December.e. Compute the variable overhead rate variance for December.f. Compute the variable overhead efficiency variance for December.
What will be an ideal response?
a. Materials price variance = (AQ × AP) ? (AQ × SP)
= AQ × (AP ? SP)
= 31,700 grams × ($9.00 per gram ? $9.70 per gram)
= 31,700 grams × (-$0.70 per gram)
= $22,190 F
or
Materials price variance = (AQ × AP) ? (AQ × SP)
= $285,300 ? (31,700 grams × $9.70 per gram)
= $285,300 ? $307,490
= $22,190 F
b. SQ = 6,000 units × 5.0 grams per unit = 30,000 grams
Materials quantity variance = (AQ × SP) ? (SQ × SP)
= (AQ ? SQ) × SP
= (29,990 grams ? 30,000 grams) × $9.70 per gram
= -10 grams × $9.70 per gram
= $97 F
c. Labor rate variance = (AH × AR) ? (AH × SR)
= AH × (AR ? SR)
= 1,760 hours × ($21.90 per hour ? $21.20 per hour)
= 1,760 hours × ($0.70 per hour)
= $1,232 U
or
Labor rate variance = (AH × AR) ? (AH × SR)
= $38,544 ? (1,760 hours × $21.20 per hour)
= $38,544 ? $37,312
= $1,232 U
d. SH = 6,000 units × 0.30 hours per unit = 1,800 hours
Labor efficiency variance = (AH × SR) - (SH × SR)
= (AH ? SH) × SR
= (1,760 hours ? 1,800 hours) × $21.20 per hour
= (-40 hours) × $21.20 per hour
= $848 F
e. Variable overhead rate variance = (AH × AR) ? (AH × SR)
= AH × (AR ? SR)
= 1,760 hours × ($8.80 per hour ? $9.20 per hour)
= 1,760 hours × (-$0.40 per hour)
= $704 F
or
Variable overhead rate variance = (AH × AR) ? (AH × SR)
= $15,488 ? (1,760 hours × $9.20 per hour)
= $15,488 ? ($16,192)
= $704 F
f. SH = 6,000 units × 0.30 hours per unit = 1,800 hours
Variable overhead efficiency variance = (AH × SR) ? (SH × SR)
= (AH ? SH) × SR
= (1,760 hours ? 1,800 hours) × $9.20 per hour
= (-40 hours) × $9.20 per hour
= $368 F
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