Problem:
Standard Cost Card -- Per Unit
Direct materials, 4 yards at $3.50 per yard . . . . . . . . . . . . . . . . . . . . . . . . $14
Direct labor, 1.5 direct labor-hours at $12 per direct labor-hour . . . . . . . . . 18
Variable overhead, 1.5 direct labor-hours at $2 per direct labor-hour . . . . . 3
Fixed overhead, 1.5 direct labor-hours at $6 per di-rect labor-hour . . . . . . . 9
Standard cost per unit . . . . . . . . . . . . . . . . . . . . . . $44
The following additional information is available for the year just completed:
a. Company manufactured 20,000 units of product during the year;
b. A total of 80,000 yards of material were purchased during the year at a cost of $3.75 per yard. 78,000 yards of this material were used to manufacture the 20,000 units. Company determines the direct materials purchase price variance at the time of acquisition.
a. Direct laborers worked 32,500 hours during the year at an average compensation of $11.80 per hour.
b. Overhead cost is applied to the product on the basis of direct-labor hours. Data relating to manufactur-ing overhead costs follow:
Denominator activity level (direct labor-hours) . . . . . . . . . . . . . . 25,000
Budgeted fixed overhead costs (from the flexible budget) . . . . . $150,000
Actual fixed overhead costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . $148,000
Actual variable overhead costs . . . . . . . . . . . . . . . . . . . . . . . . . $68,250
1.Compute both the direct materials price variance and quantity variance for the year;
2.Compute both the direct labor rate variance and efficiency variance for the year;
3.Compute both the variable overhead spending variance and efficiency variance for the year;
4.Compute the fixed overhead budget (spending) variance and volume variance for the year.