Part $2$ Cost variance analysis

This part relates to Module $23.$ I have variance analysis support material in the Module $23$ folder in course resources.

Gourmet, Inc. produces containers of frozen food. During October the company had the following actual production and costs.

Actual Containers produced in October $700$

Variable Overhead $$4,000$

Fixed Overhead $$12,450$

Direct Labor cost $$56,000$ Which is $3,000$ Direct labor hours

Actual material purchased $$27,750$ Which is $15,000$ pounds

Actual Material pounds used $14,600$ pounds

Overhead is budgeted and applied using direct$-$labor hours. Standard cost and annual budget information are as follows:

Standard cost per container Total Per Unit

Direct Labor $3$ hours at $$19\mathrm{.}00$ $$57$

Direct Material $20$ pounds at $$1\mathrm{.}76$ $$35$

Variable overhead $3$ Direct labor hours at $$1\mathrm{.}50$ $$4\mathrm{.}50$

Fixed Overhead $3$ Direct labor hours at $$3\mathrm{.}00$ $$9$

Total $$105\mathrm{.}70$

Budgeted Monthly Fixed Overhead $$12,500$

Required: Make sure you do not forget to label the variances U or F$.$ You need to show your work either by cell reference or showing your calculation to the side.

$1.$ Calculate the direct materials price and quantity variance. Please note that the materials price variance is based on actual material purchased and the quantity variance is based on material used.

Materials price variance

Materials Quantity variance $$1,056\mathrm{.}00$ unfavorable

$2.$ Calculate the direct labor rate and efficiency variances.

Labor rate variance

Labor Efficiency variance $$17,100\mathrm{.}00$ unfavorable

$3.$ Calculate the variable overhead spending and efficiency variances.

Variable overhead spending variance $($$$500\mathrm{.}00)$ Favorable

Variable overhead efficiency variance $$1,350\mathrm{.}00$ unfavorable

$4.$ Calculate the fixed overhead budget variance.

Fixed overhead budget variance

$5.$ Pick out the two variances that you computed above that you think should be further investigated. Explain why you picked these $2$ variances and what might be the possible cause of the variances. You need to provide specific detail other than the variance was $"$U$"$ or $"$F$"$ or a large dollar amount.This part relates to Module $23.$ I have variance analysis support material in the Module $23$ folder in course resources.

Gourmet, Inc. produces containers of frozen food. During October the company had the following actual production and costs.

Overhead is budgeted and applied using direct$-$labor hours. Standard cost and annual budget information are as follows:

Required: Make sure you do not forget to label the variances U or F$.$ You need to show your work either by cell reference or showing your calculation to the side.

Calculate the direct materials price and quantity variance. Please note that the materials price variance is based on actual material purchased and the quantity variance is based on material used.

Materials price variance

Materials Quantity variance $$1,056\mathrm{.}00$ unfavorable

Calculate the direct labor rate and efficiency variances.

Labor rate variance

Labor Efficiency variance $$17,100\mathrm{.}00$ unfavorable Labo

Calculate the variable overhead spending and efficiency variances.

Variable overhead spending variance $($$$500\mathrm{.}00)$ Favorable

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