Problem: 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:
• Direct materials price variance.
• Direct materials quantity variance.
• Direct labor rate variance.
• Direct labor efficiency variance.
• Variable overhead spending variance.
• Variable overhead efficiency variance.
The response should include a reference list. Using double-space, Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.