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Problem 9 - 2 0 Basic Variance Analysis; the Impact of Variances on Unit Costs [ LO 9 - 4 , LO 9 - 5
Problem Basic Variance Analysis; the Impact of Variances on Unit Costs LO LO LO
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.
The production superintendent was pleased when he saw this report and commented: "This $ excess cost is well within the percent limit management has set for acceptable variances. It's obvious that there's not much to worry about with this product."
Actual production for the month was units. Variable overhead cost is assigned to products on the basis of direct laborhours. There were no beginning or ending inventories of materials.
Required:
Compute the following variances for May:
a Materials price and quantity variances.
b Labor rate and efficiency variances.
c Variable overhead rate and efficiency variances.
How much of the $ excess unit cost is traceable to each of the variances computed in above.
How much of the $ excess unit cost is traceable to apparent inefficient use of labor time?
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