Julius Company developed the following standard costs for its product for 2012
Standard Cost Card
Unit Standard Cost
Direct materials (6 pounds @ $3 per pound) $18
Direct labor (4 hours @ $10 per hour) 40
Manufacturing overhead
Variable (5 hours @ $4 per hour) 20
Fixed (3 hours @ $3 per hour) 9
$87
The company planned to work 220,000 direct labor hours and produce 55,000 units of product in 2012.
Actual results for 2012 are as follows:
- 52,000 units of product were produced.
- Actual direct materials purchased and used during the year amounted to 320,000 pounds at a cost of $951,600.
- Actual direct labor costs were $1,800,000 for 170,000 direct labor hours worked.
- Total actual manufacturing overhead incurred amounted to $1,435,000.
Instructions
Calculate the following variances showing all computations supporting your answers. Indicate if the variances are favorable (F) or unfavorable (U).
(a) Direct materials price and direct material quantity variances.
(b) Direct labor price and direct labor quantity variances.
(c) Overhead controllable and overhead volume variances.