Landers 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 $10.80 $10.85 19.80 Direct materials: Standard: 1.80 feet at $6.00 per foot Actual: 1.75 feet at $6.20 per foot Direct labour: Standard: 0.90 hours at $22.00 per hour Actual: 0.95 hours at $21.40 per hour Variable overhead: Standard: 0.90 hours at $7.00 per hour Actual: 0.95 hours at $6.60 per hour Total cost per unit Excess of actual cost over standard cost per unit 20.33 6.30 6.27 $37.45 $36.90 $ 0.55 The production superintendent was pleased when he saw this report and commented: This $0.55 excess cost is well within the 2% 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 12,340 units. Variable overhead cost is assigned to products on the basis of direct labour-hours. There were no beginning or ending inventories of materials a. Materials quantity and price variances. (Input all amounts as positive values. Leave no cells blank - be certain to enter "O" wherever required. Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance.) X Answer is complete but not entirely correct. $ 4,319XlU Materials quantity variance Materials price variance $ 3,702 F b. Labour efficiency and rate variances. (Input all amounts as positive values. Leave no cells blank - be certain to enter "O" wherever required. Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance.) Answer is complete but not entirely correct. x Labour efficiency variance Labour rate variance 7,034 X F 13,574xU X 2. How much of the $0.55 excess unit cost is traceable to each of the variances computed in (1) above. (Input all amounts as positive values. Leave no cells blank - be certain to enter "O" wherever required. Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance). Round your answers to 2 decimal places.) $ 0.30 F 0.35 U Materials: Quantity variance Price variance Labour Efficiency variance Rate variance Variable overhead: Efficiency variance Rate variance Excess of actual over standard cost per unit 1.100 0.57 F 0.35 U 0.38 F $ 0.55 U 3. How much of the $0.55 excess unit cost is traceable to apparent inefficient use of labour time? values. Leave no cells blank - be certain to enter "O" wherever required. Indicate the effect of e favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance). Do not round int final answers to 2 decimal places.) $ 0.55F Excess of actual over standard cost per unit Less portion attributable to labour inefficiency: Labour efficiency variance Variable overhead efficiency variance Portion due to other variances $ 1.100 0.35 U $ 0.90U
