Standard Costs

Beginning of the Period

Standards (standard quantity of input x standard price of input):

Direct materials: 3 lbs per unit * $2 per pound = $6 per unit

Direct labor: hour per unit * $16 per hour = $8 per unit

Factory overhead = $40,000 (fixed) + $4 per direct labor hour (variable)

Estimated production = 10,000 units of output (standard volume)

Required:

Part I Planning Master Budget

1. Calculate the total standard direct labor hours allowed for estimated production (10,000 units).

2. Calculate the estimated total overhead at the estimated level of production.

3. Calculate the total overhead rate (estimated total overhead/estimated standard direct labor hours).

End of the Period

Actual results

Direct materials purchased and used in production: 35,000 lbs

Actual price of direct materials purchased: $2.10 per pound

Direct labor: 5,600 hours @ $15 per hour

Total variable overhead incurred: $20,000

Total fixed overhead incurred: $45,000

Actual units produced during the period: 11,000

Required:

Part II - Control

4. Calculate the direct material price variance.

5. Calculate the direct material quantity variance.

6. Calculate the direct labor price variance.

7. Calculate the direct labor quantity variance.

8. Calculate the variable overhead price variance.

9. Calculate the variable overhead quantity variance.

10. Calculate the fixed overhead price variance.

11. Calculate the fixed overhead quantity variance.