Question
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: 1.80 feet at $2.40 per foot | $ 4.32 | |||||
Actual: 1.75 feet at $2.60 per foot | $ 4.55 | |||||
Direct labor: | ||||||
Standard: 0.90 hours at $15.00 per hour | 13.50 | |||||
Actual: 0.95 hours at $14.40 per hour | 13.68 | |||||
Variable overhead: | ||||||
Standard: 0.90 hours at $7.00 per hour | 6.30 | |||||
Actual: 0.95 hours at $6.60 per hour | 6.27 | |||||
Total cost per unit | $24.12 | $24.50 | ||||
Excess of actual cost over standard cost per unit | $0.38 | |||||
The production superintendent was pleased when he saw this report and commented: This $0.38 excess cost is well within the 5 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 13,500 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. (Round your "price per foot" answers to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)
|
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