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Question 3 M Corporation makes a product with the following standard costs: Standard Quantity Standard Price or Inputs. or Hours Rate Direct materials 7.8 kilos
Question 3 M Corporation makes a product with the following standard costs: Standard Quantity Standard Price or Inputs. or Hours Rate Direct materials 7.8 kilos $1.00 per kilo Direct labor .... 0.4 hours $18.00 per hour Variable overhead 0.4 hours $3.00 per hour The Company reported the following results concerning this product in August. Actual output.. 8,500 units Raw materials used in production 65,550 kilos Purchases of raw materials. 69,000 kilos Actual direct labor-hours 3,410 hours Actual cost of raw materials purchases..... $75,900 Actual direct labor cost $66,495 Actual variable overhead cost $9,889 The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. Required: 1- Compute the materials quantity variance. (5 marks) 2- Compute the materials price variance. (5 marks) 3- Compute the labor efficiency variance. (5 marks) 4- Compute the direct labor rate variance. (5 marks) 5- Compute the variable overhead efficiency variance. (5 marks) 6- Compute the variable overhead rate variance. (5 marks) Page 2 of 4
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