Reference no: EM133265
Question :
Helix Company produces various products in its factory, adding a karate robe. The company uses a standard cost system to help in the control of costs. According to the standards that have
Comprehensive Variance Analysis
Vitalite, Inc., gives a number of products, adding a body-wrap kit. Standard variable costs relating to a single kit are provided below:
Standard Costs and Variances 453
During April, the factory worked only 760 direct labor-hours and produced 2,000 robes. The subsequent actual costs were recorded in this month:
Raw Material Standard Labor Time
Product X342 Y561 Sintering Finishing
Alpha8 . . . . . . . . . . . . 1.8 kilos 2.0 liters 0.20 hours 0.80 hours
Zeta9 . . . . . . . . . . . . . 3.0 kilos 4.5 liters 0.35 hours 0.90 hours
Information given to materials purchased and materials used in production during May follows:
Material Purchases Purchase Cost Standard Price Used in Production
X342 . . . . . . . . . . . 14,000 kilos $51,800 $3.50 per kilo 8,500 kilos
Y561 . . . . . . . . . . . 15,000 liters $19,500 $1.40 per liter 13,000 liters
The subsequent additional information is available:
a. The company identifies price variances when materials are purchased.
b. The standard labor rate is $19.00 per hour in Finishing and $20.00 per hour in Sintering.
c. During 1st May, 200 direct labor-hours were worked in Sintering at a net labor cost of $27,000, and 2,850 direct labor-hours were worked in completing at a total labor cost of $59,850.
d. Production during May was 1,500 Alpha8s and 2,000 Zeta9s been set for the robes, the factory should work 780 direct labor-hours each month and manufacture 1,950 robes. The standard costs related with this level of production are as given:
Total Per Unit of Product
Direct materials . . . . . . . . . . . . . . . . . . . . . . . . $35,490 $18.20
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . $7,020 3.60
Variable manufacturing overhead (based on direct labor-hours) . . . . . . . . $2,340 1.20 $23.00
Total Per Unit of Product
Direct materials (6,000 yards) . . . . . . . . . . $36,000 $18.00
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . $7,600 3.80
Variable manufacturing overhead . . . . . . . $3,800 1.90 $23.70
At standard, each robe should need 2.8 yards of material. All of the materials purchased in the month were used in production.
Required:
Evaluated the given variances for April:
1. The materials quantity variances and price.
2. The labor efficiency variances and rate.
3. The variable manufacturing overhead rate and efficiency variances.