Question
Question 3 Time: 20 minutes Total: 12 marks Orville Companys standard and actual costs per unit are provided below for the most recent period. During
Question 3
- Time: 20 minutes
- Total: 12 marks
Orville Companys standard and actual costs per unit are provided below for the most recent period. During this time period 650 units were actually produced.
| Standard | Actual |
Materials: |
|
|
Standard: 2.5 metres at $2.7 per m. | $6.75 |
|
Actual: 2.1 metres at $2.60 per m. |
| $5.46 |
Direct labour: |
|
|
Standard: 1.6 hrs. at $8.40 per hr. | 13.44 |
|
Actual: 1.7 hrs. at $8.50 per hr. |
| 14.45 |
Variable overhead: |
|
|
Standard: 1.6 hrs. at $4.70 per hr. | 7.52 |
|
Actual: 1.7 hrs. at $4.20 per hr. |
| 7.14 |
Total unit cost | $27.71 | $27,05 |
For simplicity, assume there was no inventory of materials at the beginning or end of the period.
Required:
Given the information above, compute the following variances. Also indicate if the variances are favorable or unfavorable.
- Materials price variance (2 marks)
- Materials quantity variance (2 marks)
- Direct labour rate variance (2 marks)
- Direct labour efficiency variance (2 marks)
- Variable overhead efficiency variance (2 marks)
6. Variable overhead spending variance (2 marks)
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