Standard Costs and Variances Exercises

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1.)

The following labor standards have been established for a particular product:

Standard labor-hours per unit of output	10.2	hours
Standard labor rate	$14.00	per hour

The following data pertain to operations concerning the product for the last month:

Actual hours worked	8,000	hours
Actual total labor cost	$108,800
Actual output	900	units

What is the labor efficiency variance for the month?

$16,048 F

$19,720 F

$16,520 F

$19,720 U

2.)

Buis Corporation, which makes landing gears, has provided the following data for a recent month:

Budgeted production	1,200	gears
Standard machine-hours per gear	4.7	machine-hours
Budgeted supplies cost	$5.30	per machine-hour
Actual production	1,900	gears
Actual machine-hours	9,600	machine-hours
Actual supplies cost (total)	$49,622

Required:

Determine the rate and efficiency variances for the variable overhead item supplies and indicate whether those variables are favorable or unfavorable. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Variable overhead rate variance

$

(Favorable or Un or none)

Variable overhead efficiency variance

$

(Favorable or Un or none)

3.)

Blue Corporation's standards call for 6,000 direct labor-hours to produce 1,500 units of product. During May 1,350 units were produced and the company worked 1,400 direct labor-hours. The standard hours allowed for May production would be:

5,400 hours

6,000 hours

4,650 hours

1,400 hours

4.)

Hurren Corporation makes a product with the following standard costs:

	Standard Quantity or Hours	Standard Price or Rate	Standard Cost Per Unit
Direct materials	9.80 grams	$4.00 per gram	$39.20
Direct labor	0.3 hours	$15.00 per hour	$4.50
Variable overhead	0.3 hours	$8.00 per hour	$2.40

The company reported the following results concerning this product in June.

Originally budgeted output	8,500	units
Actual output	8,600	units
Raw materials used in production	41,400	grams
Purchases of raw materials	48,500	grams
Actual direct labor-hours	710	hours
Actual cost of raw materials purchases	$263,490
Actual direct labor cost	$8,353
Actual variable overhead cost	$3,326

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.

The labor rate variance for June is:

$2,312 U

$2,297 U

$2,297 F

$2,312 F

5.)

Pardoe, Inc., manufactures a single product in which variable manufacturing overhead is assigned on the basis of standard direct labor-hours. The company uses a standard cost system and has established the following standards for one unit of product:

	Standard Quantity	Standard Price or Rate	Standard Cost
Direct materials	2.0 pounds	$3.25 per pound	$6.50
Direct labor	0.5 hours	$7 per hour	$3.5
Variable manufacturing overhead	0.5 hours	$1.50 per hour	$.75

During March, the following activity was recorded by the company: