Question
1. DL and VarMOH variances (5pts): Handerson Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Direct
1. DL and VarMOH variances (5pts): Handerson Corporation makes a product with the following standard costs:
| Standard Quantity or Hours | Standard Price or Rate | ||||
Direct materials |
| 8.5 | kilos | $ | 6.00 | per kilo |
Direct labor |
| 0.4 | hours | $ | 20.00 | per hour |
Variable overhead |
| 0.4 | hours | $ | 6.00 | per hour |
The company planned to produce 3,350 units of output during August and reported the following results concerning this product in August.
|
|
|
|
Actual output |
| 3,200 | units |
Raw materials used in production |
| 29,030 | kilos |
Purchases of raw materials |
| 31,600 | kilos |
Actual direct labor-hours |
| 1,160 | hours |
Actual cost of raw materials purchases | $ | 195,920 |
|
Actual direct labor cost | $ | 22,736 |
|
Actual variable overhead cost | $ | 7,540 |
|
The company applies variable overhead on the basis of direct labor-hours. The direct materials (DM) purchases variance is computed when the materials are purchased.
1. Calculate the direct labor spending variances.
2. Calculate the direct labor efficiency variance.
3. Calculate the direct labor rate variance.
4. Calculate the variable overhead efficiency variance.
5. Calculate the variable overhead rate variance.
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