Reference no: EM1313216

Calculation of Material cost variance, labor variance and Over head variance.

Rax Company has developed the following standards for one of its products:

Direct materials	12 pounds X $14 per pound
Direct labor	3 hours X $18 per hour
Variable overhead	3 hours X $8 per hour

The following activities occurred during the month of October:

Materials purchased	10,000 pounds at $13.60 per pound
Materials used	9,000 pounds
Units produced	800 units
Direct labor	2,500 hours at $19.00 per hour
Actual variable overhead	$22,000

The company records materials price variances at the time of purchase.

1. Refer to Figure 9-2. Rax Company's labor rate variance would be

a.         $4,300 favorable

b.        $4,300 unfavorable

c.         $2,500 favorable

d.        $2,500 unfavorable

Figure 9-3

Standard cost of materials	$0.50 per pound
Materials purchased and used	20,000 pounds
Total paid to suppliers	$11,000
Standard quantity allowed	18,000 pounds

Tuvok Corporation has developed the following standards for one of its products:

2. Refer to Figure 9-3. Tuvok Company's actual cost per pound of materials must have been
(round to the nearest cent)

a.         $0.50

b.        $0.55

c.         $0.61

d.        $5.00

3. Refer to Figure 9-3. Tuvok Company's material price variance is

a.         $1,000 unfavorable

b.        $2,000 unfavorable

c.         $1,100 unfavorable

d.        cannot be computed from the information given

4. During October, 14,000 direct labor hours were worked at a standard cost of $40 per hour. If the labor rate variance for October was $70,000 favorable, the actual cost per labor hour must be

a.         $35

b.        $40

c.         $45

d.        none of the above

5. Using more highly skilled direct laborers might affect which of the following variances?

a.         materials usage variance

b.        labor efficiency variance

c.         variable manufacturing overhead efficiency variance

d.        all of the above

Figure 9-5

Budgeted fixed overhead for the year	$300,000
Budgeted direct labor hours for the year	30,000
Actual fixed overhead for August	$24,000
Actual variable overhead for August	$10,000
Direct labor hours worked in August	2,600
Standard variable overhead cost per direct labor hour	$4
Standard direct labor hours allowed for August production	2,750

6. Refer to Figure 9-5. The standard rate for total overhead is

a.         $14

b.        $13

c.         $10

d.        $4

7. Refer to Figure 9-5. The variable overhead spending variance would be

a.         $2,000 favorable

b.        $1,200 favorable

c.         $400 favorable

d.        $200 favorable

8. Refer to Figure 9-5. The variable overhead efficiency variance would be

a.         $1,000 favorable

b.        $600 favorable

c.         $400 favorable

d.        $200 favorable

9. Refer to Figure 9-5. The fixed overhead spending variance would be

a.         $2,500 unfavorable

b.        $2,500 favorable

c.         $1,000 unfavorable

d.        $1,000 favorable

10. Refer to Figure 9-5. The fixed overhead volume variance would be

a.         $2,500 unfavorable

b.        $2,500 favorable

c.         $1,000 unfavorable

d.        $1,000 favorable