Compute price & quantity variances for materials, labor, OH
Headsmart manufactures headphone cases. During September 2011, the company produced 106,000 cases and recorded the fallowing cost data:
Standard Cost Information
Direct Materials 2 parts $0.17 per part
direct Labor 0.02 hours $9.00 per hour
variable manufacturing overhead 0.02 hours $10,00 per hour
fixed manufacturing overhead ($32,640 for static budget volume of 96,000 units
and 1,920 units and 1,920 hours, or $17 per hour)
Actual Information
Direct materials (265,000 parts were purchased @ $0.22 per part, 215,000 parts
were used)
Direct labor (1,720 hours @ $9.10 per hour+ $15,652)
Manufacturing overhead $60,500 (30 percent was fixed)
Required:
a) Evaluate the price variances of price and quantity for: materials, labor, variable overhead and fixed overhead and if they are favorable or unfavorable.
b) Comment on the variances.