Question
Product X is produced by Joe Company and requires direct materials of $4 per unit (1.5 pound of Material Q), direct labor of $3 per
Product X is produced by Joe Company and requires direct materials of $4 per unit (1.5 pound of Material Q), direct labor of $3 per unit (.2 hours at $15 per hour), and overhead of $4 per unit (allocated on the basis of machine hours). Normal (standard) production is 15,000 units per month. During April, Joe Company had actual material costs of $63,190 and actual labor costs of $41,810. Actual production was equal to normal (standard) production. Assuming there were no differences between standard quantities and actual quantities used of both labor and materials, calculate the following, being sure to indicate whether each variance is favorable or unfavorable. When you answer, be sure that your answers are identified by the letters above.
A. What is the total production cost variance?
B. What is the materials price variance?
C. What is the materials usage variance?
D. What is the labor price variance?
E. What is the labor usage variance?
F. What is the total overhead variance?
G. Briefly describe some possible causes for the variances calculated above
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