Problem: Nolan Inc. makes a product with the following standard costs:
Inputs Standard Quantity or hours Standard price or rate
Direct materials 5.3 kilos $6.00 per kilo
Direct labor 0.5 hours $10.00 per hour
Variable overhead 0.5 hours $4.00 per hour
The company reported the following results concerning this product in August.
Actual output ......................................................................... 2,100 units
Raw materials used in production............ 10,860 kilos
Purchases of raw materials ............................................. 11,800 kilos
Actual direct labor-hours ................................................. 1,100 hours
Actual cost of raw materials purchases .............. $73,160
Actual direct labor cost .............................................................. $10,560
Actual variable overhead cost ............................... $4,510
The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
A. The materials quantity variance for August is:
B. The materials price variance for August is:
C. The labor efficiency variance for August is:
D. The labor rate variance for August is:
E. The variable overhead efficiency variance for August is:
F. The variable overhead rate variance for August is: