Question 7
The Hothi Gorge produces a special metal alloy call Uranium. The standard costs for Uranium are as follows:
Direct materials	10 kg at $2.00 per kg
Direct labour	1.5 hours at $15.00 per hour
Variable manufacturing overhead	1.5 hours at $3.00 per hour
For December, the following activity was recorded by the Hothi Gorge relative to Uranium:
1. Materials were purchased, 10,000 kg at a cost of $21,000.
2. There was no beginning inventory of raw materials on hand at the start of the month. At the end of the month there were no raw materials left on hand.
3. The company employs 10 metallurgists to work on Uranium. During December, each worked an average of 160 hours at an average rate of $14.00 per hour.
4. Variable manufacturing overhead is assigned to Uranium on the basis of direct labour hours. Variable manufacturing overhead costs for December totalled $5,200.
5. During December, 1010 units of Uranium were produced.
Required -
Calculate the following variances, name the variance and indicate if the variance is favourable or unfavourable:
a) Direct materials price, quantity, and total variance.
b) Direct labour, rate, efficiency, and total variance.
c) Variable manufacturing overhead spending, efficiency, and total variance.
Direct Materials Variance
Actual			Actual @ Standard			Standard
Actual units	10,000		Actual units	10,000		Actual units	10,100
Actual kilograms per unit	2.10		Actual kilograms per unit	2.10		Standard kilograms per unit	2.00
Total actual kilograms	21,000		Total actual kilograms	21,000		Total standard kilograms	20,200
Actual price			Standard price	$ 2.00		Standard price	$ 2.00
Total			Total	$ 42,000.00		Total	40,400.00		-	3.00
					1,600.00	Favourable			-	0.50
					Efficiency Variance				-	0.50
									-	0.50
									-	0.50
Direct Labour Variance
Actual			Actual @ Standard			Standard
Total			Total			Total			-	3.00
									-	0.50
									-	0.50
									-	0.50
									-	0.50
Variable Overhead Variance
Actual			Actual @ Standard			Standard
Total			Total			Total			-	3.00
									-	0.50
									-	0.50
									-	0.50
									-	0.50