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Mickey's Amusements manufactures ride vehicles for roller coasters. One of their products is a seat with hamess, for coasters that have inversions. Mickey's uses a
Mickey's Amusements manufactures ride vehicles for roller coasters. One of their products is a seat with hamess, for coasters that have inversions. Mickey's uses a standard cost system for all products. According to the standards set for the seat with hamess, the factory should work 990 hours each month to produce 1,980 seats. The standard costs associated with this production are: Total Per Seat $39,798 $ 20.10 5,940 3.00 Direct materials Direct labor Variable manufacturing OH (based on direct labor hours) 3,168 1.60 $24.70 During January, the factory worked only 1,000 direct labor hours and produced 2,200 seats. The following actual costs were incurred during January: Total Per Seat Direct materials (7,400 sq. ft.) $40,700 $ 18.50 Direct labor 8,140 3.70 Variable manufacturing OH (based on direct labor hours) 3,960 1.80 $24.00 At the standard, each seat requires 3.0 sq. ft of material. All materials purchased in January were used in production Calculate the following (be sure to label variances as F/U): 1) What is the Materials price variance? (Answer: 8,880 F) 2) What is the Materials quantity variance? (Answer: $5,360 U) 3) What is the labor rate variance? (Answer: $2,140 U) 4) What is the Labor efficiency variance? (Answer: $600 F) 5) What is the variable OH rate variance? (Answer: $760 U) 6) What is the variable OH efficiency variance? (Answer: $320 F)
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