Problem: Manufacturing Variances
Delta Products prepares its budgets on the basis of standard costs. A responsibility report is prepared monthly showing the differences between master budget and actual results. Variances are analyzed and reported separately. There are no materials inventories.
The following information relates to the current period.
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Standard costs (per unit of output)
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Direct materials, 6 gallons @ $2.00 per gallon
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$12
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Direct labor, 3 hours @ $36 per hour
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$108
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Factory overhead
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Variable (25% of direct labor cost)
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$27
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Total standard cost per unit
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$147
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Actual costs and activities for the month follow.
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Materials used
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15,120 gallons at $1.80 per gallon
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Output
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2,280 units
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Actual labor costs
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6,400 hours at $40 per hour
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Actual variable overhead
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$60,750
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Task
Prepare a cost variance analysis for the variable costs.