ABC Inc. spent a total of $48,000 on factory overhead. Of this, $28,000 was fixed overhead. ABC Inc. had budgeted $27,000 for fixed overhead. Actual machine hours were 5,000. Standard hours for units made were 4,800. The standard variable overhead rate was $4.10.

Required:

Calculate the variable overhead rate variance.

Work and Solution:

Lizbeth, Inc., makes ice cream. The toffee coffee ice cream takes 4 quarts of cream, 3 cups of sugar, 2 tablespoons of toffee flavoring, and 1.5 tablespoons of coffee flavoring per gallon. The standard prices are $2.00 per quart of cream, $0.40 per cup of sugar, $0.50 per tablespoon of toffee flavoring, and $0.75 per tablespoon of coffee flavoring.

Required:

1. What is the standard material cost for a gallon of toffee coffee ice cream?
2. If Lizbeth makes 35 gallons of toffee coffee ice cream, how much of each of the ingredients should she use?
3. If Lizbeth uses 105 quarts of cream to make 25 gallons of ice cream, what would be the cream (direct materials) quantity variance?
4. If Lizbeth uses 45 tablespoons of toffee flavoring to make 25 gallons of ice cream, what would be the toffee flavoring (direct materials) quantity variance?

Work and Solution: