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) 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 (lbs.) 723,000 870,000 885,000 Direct labor: Cost $270,000 $360,000 $323,000 44,000 Usage (hrs.) 36,000 46,000 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 A Materials Usage Variance A Labor Rate Variance A Labor Efficiency Variance A 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) 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 (lbs.) 723,000 870,000 885,000 Direct labor: Cost $270,000 $360,000 $323,000 44,000 Usage (hrs.) 36,000 46,000 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 A Materials Usage Variance A Labor Rate Variance A Labor Efficiency Variance A
