2.Compute the materials and labor variances for April, May, and June. Identify those that would require investigation by comparing each variance to the amount of the limit computed in part 1. Compute the actual percentage deviation from standard. Round percentages to 1 decimal place. Use minus sign to enter negative percentages and amounts. If there is no variance, enter "0" in the amount and percentage boxes and select "No variance" from the dropdown menu. Round intermediate variance calculations to four decimal places, if necessary, and round your final answers to the nearest whole dollar.
The management of Golding Company has determined that the cost to investigate a variance produced by its standard cost system ranges from $2,000 to $3,000. If a problem is discovered, the average benefit from taking corrective action usually outweighs the cost of investigation. Past experience from the investigation of variances has revealed that corrective action is rarely needed for deviations within 8% of the standard cost. Golding produces a single product, which has the following standards for materials and labor: Direct materials (8 lbs. @ $0.25) $2 Direct labor (0.4 hr. @ $7.50) 3 Actual production for the past three months with the associated actual usage and costs for materials and labor follow. There were no beginning or ending raw materials inventories. April May June Production (units) 90,000 100,000 110,000 Direct materials: Cost $189,000 $218,000 $230,000 Usage (Ibs.) 723,000 870,000 885,000 Direct labor: Cost $270,000 $323,000 $360,000 Usage (hrs.) 36,000 44,000 46,000What upper and lower control limits would you use for materials variances? For labor variances? April Materials Price standard 180,750 Upper Control Limit 195,210 Lower Control Limit 166,290 Quantity standard 180,000 Upper Control Limit 194,400 Lower Control Limit 165,600 Labor Price standard 270,000 Upper Control Limit 291,600 Lower Control Limit 248,400 Efficiency standard 270,000 Upper Control Limit 291,600 Lower Control Limit $ 248,400May Materials Price standard 217,500 Upper Control Limit 234,900 Lower Control Limit 200,100 Quantity standard 200,000 Upper Control Limit 216,000 Lower Control Limit 184,000 Labor Price standard 330,000 Upper Control Limit 356,400 Lower Control Limit 303,600 Efficiency standard 300,000 Upper Control Limit 324,000 Lower Control Limit 276,000June Materials Price standard 221,250 Upper Control Limit 238,950 Lower Control Limit 203,550 Quantity standard 220,000 Upper Control Limit 237,600 Lower Control Limit 202,400 Labor Price standard 345,000 Upper Control Limit 372,600 Lower Control Limit 317,400 Efficiency standard 330,000 Upper Control Limit 356,400 Lower Control Limit 303,600 ACCOU2. Compute the materials and labor variances for April, May, and June. Identify those that would require investigation by comparing each variance to the amount of the limit computed in part 1. Compute the actual percentage deviation from standard. Round percentages to 1 decimal place. Use minus sign to enter negative percentages and amounts. If there is no variance, enter "0" in the amount and percentage boxes and select "No variance" from the dropdown menu. Round intermediate variance calculations to four decimal places, if necessary, and round your final answers to the nearest whole dollar. Amount Direction Limit Percent Will it be investigated? April Materials Price Variance +/- $ Materials Usage Variance +/-$ Labor Rate Variance +/-$ Labor Efficiency Variance +/- $ May Materials Price Variance +/- $ Materials Usage Variance +/- $ Labor Rate Variance +/- $ Labor Efficiency Variance +/- $ June Materials Price Variance +/-$ Materials Usage Variance +/- $Will it be investigated? Amount Direction Limit Percent April % Materials Price Variance +/-$ +/-$ % Materials Usage Variance +/-$ % Labor Rate Variance % Labor Efficiency Variance +/- $ May Materials Price Variance +/- $ Materials Usage Variance +/-$ abor Rate Variance +/- $ Labor Efficiency Variance +/- $ June Materials Price Variance +/- $ Materials Usage Variance +/- $ abor Rate Variance +/- $ abor Efficiency Variance +/- $
