Question
Calculate price and quantity variances as well as spending and efficiency variances. Be sure to specify whether variances are favorable or unfavorable. Keep in mind
Calculate price and quantity variances as well as spending and efficiency variances. Be sure to specify whether variances are favorable or unfavorable. Keep in mind that price and quantity variances for each category should add up to the total variance for that category.
Given the following information:
Variable overhead costsincurred$20,570
Material purchased andused2,900 pounds
Direct labor costsincurred$24,500
Direct labor hoursincurred2,450 hours
Finished unitsproduced500 units
Actual materialcost$37 per pound
Standard direct laborcost$9 per hour
Standard materialcost$40 per pound
Standard variableoverhead$8 per hour
Standard pounds of material in a finishedunit6 pounds
Standard direct labor hours per finishedunit5 hours
Required:
- Compute the price and quantity variances for direct materials.
- Compute the price and quantity variances for direct labor.
- Compute the spending (price) and efficiency (quantity) variances for variable overhead.
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