In order to properly track costs, Sweet Wave Bakery uses very stringent standard costs in evaluating efficiency. Management is working hard to make these costs precise, but they have not yet achieved this goal. Currently, they use the following standards:

The January figures for purchasing, production, and labor are:

The company purchased 229,000 pounds of raw materials in January at a cost of 78 a pound.

Production used 229,000 pounds of raw materials to make 115,500 units in January.

Direct labor spent 18 minutes on each product at a cost of $7.80 per hour.

Overhead costs for January totaled $54,673 variable and $73,800 fixed.

Material Lbs per unit X Price per lb.

Metal 1.00 X $0.63 = $0.63

Plastic .75 X 1.00 = 0.75

Rubber .25 X 0.88 =0.22

Total 2.00lbs $1.60= $0.80/lb.

Instructions

Answer the following questions about standard costs.

For the labor rates, use 2 decimal places

A.

What is the materials price variance?

	Materials Price Variance:
	Actual Quantity	x	Actual Price	Equals
	Answer		Answer	Answer
	Actual Quantity	x	Standard Price	Equals
LESS:	Answer		Answer	Answer
					Favorable/Unfavorable
			Total	Answer	AnswerFavorableUnfavorable

B.	What is the materials quantity variance?
	Standard quantity: Units produced x Total pounds per unit
	Actual Quantity	x	Standard Price	Equals
	Answer		Answer	Answer
	Standard Quantity	x	Standard Price	Equals
LESS:	Answer		Answer	Answer
					Favorable/Unfavorable
			Total	Answer	AnswerFavorableUnfavorable

C.	What is the total material variance?
	Actual Quantity	x	Actual Price	Equals
	Answer		Answer	Answer
	Standard Quantity	x	Standard Price	Equals
LESS:	Answer		Answer	Answer
					Favorable/Unfavorable
			Total	Answer	AnswerFavorableUnfavorable

D.	What is the labor price variance?
	Actual hours: Units produced x actual hours used	hint: 18min/60min = actual hours used
	Actual Hours	x	Actual Rate	Equals
	Answer		Answer	Answer
	Actual Hours	x	Standard Rate	Equals
LESS:	Answer		Answer	Answer
					Favorable/Unfavorable
			Total	Answer	AnswerFavorableUnfavorable

E.	What is the labor quantity variance?
	Standard hours: Units produced x standard hours worked
	Actual Hours	x	Standard Rate	Equals
	Answer		Answer	Answer
	Standard Hours	x	Standard Rate	Equals
LESS:	Answer		Answer	Answer
					Favorable/Unfavorable
			Total	Answer	AnswerUnfavorableFavorable

F.	What is the total labor variance?
	Actual Hours	x	Actual Rate	Equals
	Answer		Answer	Answer
	Standard Hours	x	Standard Rate	Equals
LESS:	Answer		Answer	Answer
					Favorable/Unfavorable
			Total	Answer	AnswerUnfavorableFavorable

G.	What is the total overhead variance?
	Standard hours allowed: Units produced x .25 hours
	Overhead applied: Predetermined overhead rate x standard hours allowed
	Actual Overhead		Answer	(Hint: variable+fixed)
	LESS:
	Overhead Applied	Answer
	Equals:
	Total Overhead variance		Answer	AnswerUnfavorable or Favorable	Favorable orUnfavorable