Equivalent Units of Production. Klein Products had $300$ units in beginning WIP inventory.

During the period $600$ units were started into production, and $400$ were completed and

transferred out. $500$ units were partially completed in Ending Work In Process. These $500$ units

were $90\%$ complete for Assembly and $70\%$ complete for Packaging. Cost of beginning WIP

inventory were $$4,000$ for Assembly and $$8,000$ for Packaging. Costs incurred during the period

were $$9,000$ for Assembly and $$7,000$ for Packaging.

Homework Problem #$4$: Showing the formulas and computations, calculate the following

variances:

a$)$ Materials Quantity Variance

b$)$ Materials Price Variance

c$)$ Materials spending Variance

d$)$ Labor Rate Variance

e$)$ Labor Efficiency Variance

f$)$ Labor spending Variance

g$)$ Variable overhead Rate Variance

h$)$ Variable Overhead Efficiency Variance

i$)$ Variable Overhead spending variance

Make or Buy Decision: A company makes a small engine for its products. The company has the

following costs per unit for each of the engine:

Direct materials $$25$

Direct labor $5$

Variable overhead $4$

Supervisor's salary $2$

Allocated overhead $2$

Total cost per unit $$38$

An outside supplier has offered to sell $10,000$ small engines to the company at a price of

$$350,000.$ The Supervisor's Salary is avoidable; that is$,$ the supervisor will not be needed if the

parts are purchased from the outside supplier. The Allocated overhead is unavoidable; that is$,$

the company will have the overhead costs regardless of whether it makes or buys the parts.