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chap 22 In the Materials Price & Usage Variances illustration, you can see that the actual costs are than standard and the actual quantity purchased

chap 22

In the Materials Price & Usage Variances illustration, you can see that the actual costs are than standard and the actual quantity purchased and used is than standard. The two variances are combined for a total

material variance of $ .

Click here for an illustration of the labor variances.

Labor Price & Efficiency Variances

In the Labor Price & Efficiency Variances illustration, you can see that the actual costs are

than standard and the actual hours are than standard. The two variances are combined for a total

labor variance of $ .

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The illustrations provide the information to complete the problem.

The standard cost sheet for a product is shown.

Manufacturing Costs Standard price Standard Quantity Standard Cost per unit
Direct materials $4.30 per pound 5.80 pounds $ 24.94
Direct labor $11.70 per hour 2.00 hours $ 23.40
Overhead $2.00 per hour 2.00 hours $ 4.00
$ 52.34

The company produced 3,000 units that required:

17,900 pounds of material purchased at $4.15 per pound

5,930 hours of labor at an hourly rate of $12.00 per hour

Actual overhead in the period was $12,330

Fill in the Budget Performance Report for the period. Some amounts are provided. Round your answers to the nearest dollar. However, do not round your intermediate calculations.

Budget Performance Report
Manufacturing Costs: 3,000 units Actual Costs Standard Costs Variance (Favorable)/ Unfavorable
Direct materials $74,285 $ $
Direct labor 70,200
Overhead 12,330
$ $ $755

Split the direct materials variance into the materials price varaince and the materials usage variance. Remember that you want to isolate the price variance from the quantity variance so be sure to use factors that do not overlap. Also remember that the two variances should equal the total material variance.

Materials price variance: Materials usage variance:
(Actual price - Standard price) x
quantity (Actual quantity - Standard quantity) x
price

Split the direct labor variance into the labor price variance and the labor efficiency variance. Remember that you want to isolate the price variance from the efficiency variance so be sure to use factors that do not overlap. Also remember that the two variances should equal the total labor variance.

Labor price variance: Labor efficiency variance:
(Actual rate - Standard rate) x
hours (Actual hours - Standard hours) x
labor rate

Manufacturing variances are period costs that are rolled into

and reported on the . A favorable variance is recorded as a and an unfavorable variance is recorded as a

.

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The rollovers in the table provide the information to do the calculations for the Budget Performance Report. The illustrations in Part 2 will help with the materials price variance and the materials usage variance and the labor rate variance and the labor efficiency variance..

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