Problem: Managerial Accounting
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: 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:
o Direct materials price variance.
o Direct materials quantity variance.
o Direct labor rate variance.
o Direct labor efficiency variance.
o Variable overhead spending variance.
o Variable overhead efficiency variance.
o As a manager, why is variance analysis important?
The response should include a reference list. One-inch margins, Using Times New Roman 12 pnt font, double-space and APA style of writing and citations.