Koontz Company manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May.
Koontz Company manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May.
| | Standard Cost per Unit | | | Actual Cost per Unit |
| Direct materials: | | | | | | | | |
| Standard: 1.90 feet at $3.60 per foot | $ | 6.84 | | | | | | |
| Actual: 1.85 feet at $4.00 per foot | | | | | | | $ | 7.40 |
| Direct labor: | | | | | | | | |
| Standard: 1.05 hours at $14.00 per hour | | 14.70 | | | | | | |
| Actual: 1.10 hours at $13.50 per hour | | | | | | | | 14.85 |
| Variable overhead: | | | | | | | | |
| Standard: 1.05 hours at $7.00 per hour | | 7.35 | | | | | | |
| Actual: 1.10 hours at $6.60 per hour | | | | | | | | 7.26 |
| Total cost per unit | $ | 28.89 | | | | | $ | 29.51 |
| Excess of actual cost over standard cost per unit | | | | $ | 0.62 | | | |
| |
The production superintendent was pleased when he saw this report and commented: This $0.62 excess cost is well within the 4 percent limit management has set for acceptable variances. It's obvious that there's not much to worry about with this product."
Actual production for the month was 16,500 units. Variable overhead cost is assigned to products on the basis of direct labor-hours. There were no beginning or ending inventories of materials.
Required:
1. Compute the following variances for May:
a. Materials price and quantity variances.
b. Labor rate and efficiency variances.
c. Variable overhead rate and efficiency variances.
2. How much of the $0.62 excess unit cost is traceable to each of the variances computed in (1) above.
3. How much of the $0.62 excess unit cost is traceable to apparent inefficient use of labor time?
Koontz Company manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May. Standard Actual Cost per Cost per Unit Unit Direct materials: Standard: 1.90 feet at $3.60 per foot $ 6.84 Actual: 1.85 feet at $4.00 per foot $ 7.40 Direct labor: Standard: 1.05 hours at $14.00 per hour 14.70 Actual: 1.10 hours at $13.50 per hour 14.85 Variable overhead: Standard: 1.05 hours at $7.00 per hour 7.35 Actual: 1.10 hours at $6.60 per hour 7.26 Total cost per unit $28.89 $29.51 Excess of actual cost over standard cost per unit $0.62 The production superintendent was pleased when he saw this report and commented: This $0.62 excess cost is well within the 4 percent limit management has set for acceptable variances. It's obvious that there's not much to worry about with this product." Actual production for the month was 16,500 units. Variable overhead cost is assigned to products on the basis of direct labor-hours. There were no beginning or ending inventories of materials. Required: 1. Compute the following variances for May: a. Materials price and quantity variances. b. Labor rate and efficiency variances. c. Variable overhead rate and efficiency variances. 2. How much of the $0.62 excess unit cost is traceable to each of the variances computed in (1) above, 3. How much of the $0.62 excess unit cost is traceable to apparent inefficient use of labor time? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 How much of the $0.62 excess unit cost is traceable to each of the variances computed in (1) above. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (1.e., zero variance). Input all amounts as positive values. Round your answers to 2 decimal places.) 0.00 Materials: Price variance Quantity variance Labor: Rate variance Efficiency variance Variable overhead: Rate variance Efficiency variance Excess of actual over standard cost per unit 0.00 0.00 $ 0.00 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 How much of the $0.62 excess unit cost is traceable to apparent inefficient use of labor time? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations. Round your final answers to 2 decimal places.) Excess of actual over standard cost per unit Less portion attributable to labor inefficiency: Labor efficiency variance Variable overhead efficiency variance Portion due to other variances 0.00 $ 0.00 Required: 1. Compute the following variances for May: a. Materials price and quantity variances. b. Labor rate and efficiency variances. c. Variable overhead rate and efficiency variances. 2. How much of the $0.62 excess unit cost is traceable to each of the variances computed in (1) above. 3. How much of the $0.62 excess unit cost is traceable to apparent inefficient use of labor time? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 1a. Compute the following variances for May, materials price and quantity variances. 1b. Compute the following variances for May, labor rate and efficiency variances. 1c. Compute the following variances for May, variable overhead rate and efficiency variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (1.e., zero variance). Input all amounts as positive values.) Show less 1a. Materials price variance Materials quantity variance 16. Labor rate variance Labor efficiency variance 1c. Variable overhead rate variance Variable overhead efficiency variance
