Solution-Compute the direct materials variance

Compute the direct materials variance

Reference no: EM131539687

Question: Kudos Company has set the following standard costs per unit for the product it manufactures.

Direct materials (10 Ibs. @ $3 per Ib.). . . . . . . . . . . $30.00

Direct labor (4 hrs. @ $6 per hr.) . . . . . . . . . . . . . 24.00

Overhead (4 hrs. @ $2.50 per hr.) . . . . . . . . . . . . . 10.00

Total standard cost . . . . . . . . . . . . . . . . . . . . . . . . . $64.00

The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 10,000 units per month. The following flexible budget information is available.

2127_Operating levels.png

During May, the company operated at 90% of capacity and produced 9,000 units, incurring the following actual costs.

940_Direct materials.png

Required: 1. Compute the direct materials variance, including its price and quantity variances.

2. Compute the direct labor variance, including its rate and efficiency variances.

3. Compute these variances: (a) variable overhead spending and efficiency, (b) fixed overhead spending and volume, and (c) total overhead controllable.

4. Prepare a detailed overhead variance report (as in Exhibit 24.15) that shows the variances for individual items of overhead.

Reference no: EM131539687

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Compute the direct materials variance

Reference no: EM131539687

Reference no: EM131539687

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