Reference no: EM132916227

Variance Analysis for Decision Making

Bronfenbrenner Co. uses a standard cost system for its single product in which variable overhead is applied on the basis of direct labor hours. The following information is given:

Standard costs per unit:

Raw materials (1.5 grams at $16 per gram) ............................ $24.00

Direct labor (0.75 hours at $8 per hour).................................. $6.00

Variable overhead (0.75 hours at $3 per hour)........................ $2.25

Actual experience for current year:

Units produced ........................................................................ 22,400 units

Purchases of raw materials (21,000 grams at $17 per gram) .. $357,000

Raw materials used.................................................................. 33,400 grams

Direct labor (16,750 hours at $8 per hour).............................. $134,000 Variable overhead cost incurred.............................................. $48,575

Required:

Question 1: Compute the following variances for raw materials, direct labor, and variable overhead, assuming that the price variance for materials is recognized at point of purchase:

a. Direct materials price variance.

b. Direct materials quantity variance.

c. Direct labor rate variance.

d. Direct labor efficiency variance.

e. Variable overhead spending variance.

f. Variable overhead efficiency variance.