Calculate the following (be sure to label variances as F/U):

1) What is the materials price variance?

2) What is the materials quantity variance?
3) What is the labor rate variance?
4) What is the labor efficiency variance?
5) What is the variable OH rate variance?

6) What is the variable OH efficiency variance?

 

The answer below:

1) MPV = $8,880 Favorable
2) MQV = $5,360 Unfavorable
3) LRV = $2,140 Unfavorable
4) LEV = $600 Favorable
5) VOHRV = $760 Unfavorable
6) VOHEV = $320 Favorable

Mickey's Amusements Mickey's Amusements manufactures ride vehicles for roller coasters. One of their products is a seat with a harness for coasters that have inversions. Mickey's uses a standard cost system for all products. According to the standards set for the seat with a harness, the factory should work 1,100 hours each month to produce 2,200 seats. At the standard, each seat requires 3.0 sq. ft of material. The standard costs associated with this production are: Direct materials Direct labor Variable manufacturing OH (based on direct labor hours) Direct materials (7,400 sq. ft.) Direct labor Variable manufacturing OH (based on direct labor Total $3,520 $3.20 per hour During January, the factory worked 1,000 direct labor hours and produced 2,200 seats. The following actual costs incurred during January are: Total $40,700 hours) $ 6.70 per sq. ft. $6,600 $6.00 per hour $44,220 $8,140 $3,960 All materials purchased in January were used in production