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Problem 10-13 Basic Variance Analysis; the lmpact of Variances on Unit Costs [LO10-1, LO10-2, LO10-3] Koontz Company manufactures a number of products. The standards relating
Problem 10-13 Basic Variance Analysis; the lmpact of Variances on Unit Costs [LO10-1, LO10-2, LO10-3] 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 Actual Cost per Cost per Unit Unit Direct materials: Standard: 1.80 feet at $1.80 per foot 3.24 Actual: 1.75 feet at $2.00 per foot 3.50 Direct labor: Standard: 0.90 hours at $16.00 per hour 14.40 Actual: 0.95 hours at $15.40 per hour 14.63 Variable overhead Standard: 0.90 hours at $4.00 per hour 3.60 Actual: 0.95 hours at $3.60 per hour 3.42 Total cost per unit $21.24 $21.55 Excess of actual cost over standard cost per unit $0.31 The production superintendent was pleased when he saw this report and commented: "This $0.31 excess cost is well within the 2 percent limit management has set for acceptable variances. It's obvious that there's not much to worryabout with this product. Actual production for the month was 10,000 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. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i e, zero variance).) Materials price variance 3,500 U Materials quantity variance 900 F
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