Arthur Christian S.

Ferrer
2013-37872
1.)
Total rate
Variable rate
Fixed rate

Total
600,000
120,000
480,000

2.)
Direct materials
Direct labor
Variable overhead
Fixed overhead
Standard cost per unit

Input

Direct labor hours

60,000
60,000
60,000
Price/input

3
2
2
2

7
12
2
8

3.)
a.) 42,000 units x 1.5 Direct Labor Hours per unit = 63,000 standard Direct Labor Hours
b.)
Manufacturing Overhead
Actual Cost 606,500
Applied cost 630,000
Overapplied overhead 23,500
63,000 standard direct labor hours x 10 per direct labor hours
= 630000
4. Variable overhead variances:
= 123,500 - (65,000 x 2) = 6,500
Meaning favorable.
Variable overhead efficiency variance
= 2 (65,000 - 63,000) = 4,000
Unfavorable.
Budget variance = Actual Fixed Overhead - Budgeted Fixed Overhead
= 483,000 - 480,000
= 3,000
Unfavorable
Volume Variance = 8 (60,000 - 63,000)
= 24,000
Favorable
5.) Changed would only be observed in volume variance and it would be unfavorable
as the standard direct labor hours allowed for the year would have been less than
65,000.00

Unit price per DLH

10
2
8
Total
21
18
3
12
54

tandard Direct Labor Hours

overhead 23,500
direct labor hours

it would be unfavorable
have been less than

1.)
Total rate
Variable rate
Fixed rate

Total
297,500
87,500
210,000

Direct labor hours

35,000
35,000
35,000

Unit price per DLH

8.5
2.5
6

2.) 32,000 standard hours x 8.5 per hour = 272,000

3. Variiable overhead rate variance
= 78,000 (30,000 hours x 2.5 per hour) = 3,000
Unfavorable
Budget variance = 209,400 - 210,000 = 600 difference, favorable
Volume variance = 6 per hour (35,000 - 32,000 hours) = 18,000 Unfavorable
4.) Rate variance: Include price and quantity factors. Over head spending shows
the difference between the actual and standard prices for var. overhead items.
It also shows the diffrence or a comparison of actual versus planned output for
the period. Since the variable overhead spending is deemed unfavorable,
departure from the increase in prices or inefficiency in the use of resources
may have been the cause.
Efficiency Variance: This shows how productively inputs are being used to produce
outputs. Since the variable overhead increases proportionally with labor-hours,
the indirect effect of the reduction by regulations led to reduction in
overhead spending by about 5,000.
Fixed overhead
Budget variance: Diffrence between budgeted and actual fixed cost. Variance is favoindicating that actual expenses were lower than planned in the budget.
Volume variance: Results from the discrepancy of input to output usage of actual
with planned. Unfavorable for the case as there lack of productivity was been displayed.

displayed.

1.) Direct materials price and quantity variances:

Materials price variance = AQ (AP - SP)
64,000 feet ( 8.55 - 8.45 per foot) = 6,400
Unfavorable
Materials quantity variance = SP (AQ - SQ)
8.45 per foot ( 64,000 feet - 60,000) = 33,800
Unfavorable
2.) Direct labor rate and efficiency variances:
Labor rate variance = AH (AR - SH)
43,500 (15.8 per DLH - 16 per DLH) = 8,700
Favorable
Labor effiency variance = SR (AH - SH)
16 per DLH (43,500 direct labor hours - 42,000 ) = 24,000
Unfavorable
3.) Variable overhead rate variance = (AH x AR) - (AH x SR)
108,000 - (43,500 DLH x 2.5 per DLH) = 750
Favorable
Variable overhead efficiency variance = SR (AH - SH)
2.5 per DLH (43,500 DLH - 42,000) = 3,750
Unfavorable
Budget variance = 211,800 - 210,000
= 1,800 Unfavorable
Volum Variance = 6 per DLH (35,000 - 42,000)
= 42,000 Favorable

4.) Total variances:

Direct materials variance
Price
Quanity
Direct labor variances
Rate
Efficiency
Variable manufacturing ov
Rate
Efficiency
Fixed manufacturing over
Budget
Volume
Total

Since results of the propo

should be given a bonus.
while labor efficiency is at
gation.

The unfavorable variance

efficiency are not evident
variance in volume, the la
than predetermined rates
could have resulted from
on volume.

al variances:
materials variance
6,400 Unfavorable
33,800 Unfavorable

labor variances

8,700 Favorable
24,000 Unfavorable
e manufacturing overhead variances
750 Favorable
3,750 Unfavorable
manufacturing overhead variances
1,800 Unfavorable
42,000 Favorable
18,300 Unfavorable

esults of the proposal is unfavorable, not everyone

be given a bonus. Material quantity varaince is 6.7%
abor efficiency is at 3.6% which warrants an investi-

favorable variances for materials quantity and labor

ncy are not evidentas they offset twith the favorable
ce in volume, the latter resulting from better productivity
redetermined rates. The favorable variance in volume
have resulted from economies of scale or stocking up

1.)
Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Standard cost per unit

Units

Price per unit

3
1
1
1

2.) Materials variances:

Materials price variance
= 24,000 yards (4.8 - 4.4 per yard) = 9,600 Unfavorable
Materials quantity variance
= 4.4 per yard (18,500 - 18,000 yards) = 2,200 Unfavorable
Labor variances:
Labor rate variance
= 5,800 DLH (13 - 12 per DLH) = 5,800 Unfavorable
Labor efficiency variance
= 12 per DLH ( 5,800 - 6,000) = 2,400 Favorable
3.) Variable overhead variance
Variable overhead rate variance
= (29,580) - (5,800 x 5 per DLH) = 580 Unfavorable
Variable overhead efficiency variance
= 5 per DLH (5,000 - 6,000 DLH) = 1,000 Favorable
Budget Variance
Budget Variance = 60,400 - 59,000 = 1,400 Unfavorable
Volume Variance = 11.8 per DLH (5,000 DLH - 6,000 )= 11,800 Favorable

4
12
5
12

Total
13.2
12
5
11.8
42

4.) Planned activity levels (quantity)

affects standard unit costs. Where higher
planned levels, the lower standard costs
will be. Fixed portion of overhead costs
are allocated or spread over a greater
unit of planned quantity.
Volume variance will not be controlled
nor really be affected by controlled
spending. It can only be controlled
through the actual activity done.