Part CAugust Variance Analysis

During September of the current year, the controller was asked to perform variance analyses for August. The January operating data provided the standard prices, rates, times, and quantities per case. There were 1,500 actual cases produced during August, which was 250 more cases than planned at the beginning of the month. Actual data for August were as follows:

	Actual Direct Materials
	Price per Unit	Quantity per Case
Cream base	$0.016 per oz.	102 ozs.
Natural oils	$0.32 per oz.	31 ozs.
Bottle (8-oz.)	$0.42 per bottle	12.5 bottles

	Actual Direct	Actual Direct Labor
	Labor Rate	Time per Case
Mixing	$18.20	19.50 min.
Filling	14.00	5.60 min.

Actual variable overhead	$305.00
Normal volume	1,600 cases

The prices of the materials were different than standard due to fluctuations in market prices. The standard quantity of materials used per case was an ideal standard. The Mixing Department used a higher grade labor classification during the month, thus causing the actual labor rate to exceed standard. The Filling Department used a lower grade labor classification during the month, thus causing the actual labor rate to be less than standard.

	Required-Part C:
10.	Determine and interpret the direct materials price and quantity variances for the three materials.
11.	Determine and interpret the direct labor rate and time variances for the two departments. Round hours to the nearest hour.
12.	Determine and interpret the factory overhead controllable variance.
13.	Determine and interpret the factory overhead volume variance.

10. Determine and interpret the direct materials price and quantity variances for the three materials.

Direct Materials Price Variance
	Cream Base		Natural Oils		Bottles
Difference
X
Direct materials price variance

Direct Materials Quantity Variance
	Cream Base		Natural Oils		Bottles
Difference
X
Direct materials quantity variance

The fluctuation in caused the direct material price variances. All the quantity variances were indicating .

11. Determine and interpret the direct labor rate and time variances for the two departments. Round hours to the nearest tenth of an hour.

Direct Labor Rate Variance
	Mixing Department		Filling Department
Difference
X
Direct labor rate variance

Direct Labor Time Variance
	Mixing Department		Filling Department
Difference
X
Direct labor time variance

The change in the caused the labor rate variances. This change have been responsible for the direct labor time variance.

12. Determine and interpret the factory overhead controllable variance.

Factory Overhead Controllable Variance
Factory overhead controllable variance

The factory overhead controllable variance was caused by the variance in .

13. Determine and interpret the factory overhead volume variance. Round rate to four decimal places.

Factory Overhead Volume Variance
Normal volume (cases)
Actual volume (cases)
Difference
X
Factory overhead volume variance

The volume variance indicates the cost of .