Problem 11-5 Comprehensive Variance Problem
Hayes Chemical Company produces a chemical used in dry cleaning. Its accounting system uses standard costs. Standards for each 0.5-gallon can of chemical and actual data for Hayes Chemical follow:
		Standards and budgeted information:
		Gallons of material per can of chemical		1.20
		Hours of labor per can of chemical			1.50
		Standard cost per gallon of material			$6.00
		Standard cost per hour of labor			$9.00
		Overhead application rate per can			$7.75
		Expected production - cans of chemical		20,000
		Expected fixed overhead per year			$55,000
		Variable overhead rate per 0.5-gallon can		$5.00
		Actual information for 2018:
		Cans produced					23,000
		Gallons of material purchased				35,000
		Cost of material purchased				$250,000
		Gallons of material used in production		30,000
		Cost of direct labor incurred				$290,000
		Average wage rate per hour				$8.25
		Actual overhead cost				$220,000
Required
a.Determine the standard cost per unit.
	Material					=
	Labor					=
	Variable overhead
	Fixed overhead				=
	Total unit cost
b.Calculate the material, labor, and overhead standards.
	Material price variance
						=
			Favorable or unfavorable?
	Material quantity variance
						=
			Favorable or unfavorable?
	Labor rate variance
						=
			Favorable or unfavorable?
	Labor efficiency variance
						=
			Favorable or unfavorable?
	Overhead controllable variance
						=
			Favorable or unfavorable?
	Overhead volume variance
						=
			Favorable or unfavorable?
c. List a possible cause for each variance.
	Unfavorable Material Price Variance:
	Unfavorable Material Quantity Variance:
	Favorable Labor Rate Variance:
	Unfavorable Labor Efficiency Variance:
	Unfavorable Controllable Overhead Variance:
	Favorable Overhead Volume Variance: