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The SCC Division of the Big-Drug Company uses standard costing to help control their production costs. The division's main product is a pharmaceutical product that

The SCC Division of the Big-Drug Company uses standard costing to help control their production costs. The division's main product is a pharmaceutical product that comes in a multi-dose package. The standard variable costs per package are given below:

Direct materials (chemical ingredients 1.25 ounces @$1.00 per ounce)

Direct materials (packaging 1 package piece @$0.45 per package piece)

Direct labor (0.40 hour @ $18.00 per hour)

Variable overhead ($1.50 per direct labor hour)

Fixed overhead ($2.00 per direct labor hour)

During the most recent month, 100,000 packages of the product were produced. Other salient information related to the production of the 100,000 packages follows:

Actual variable overhead

$58,000

Actual fixed overhead

$87,000

Actual direct labor hours

40,200

Actual direct labor hourly rate

$17.90

DM chemicals purchase price

$1.01

DM chemicals purchase quantity

140,000

DM packages purchase price

$0.46

DM packages purchase quantity

104,000

DM chemicals used

135,000

DM packages used

102,000

Fixed Overhead Budget

$85,000

For questions 1-9 compute each of the following variances indicating both the dollar amount and whether the amount is favorable (F) or unfavorable (U). If a variance is zero please input zero for the dollar amount and leave the F and U columns blank.

1.

DM chemical purchase price variance

2.

DM chemical efficiency (quantity) variance

3.

DM packaging purchase price variance

4

DM packaging efficiency (quantity) variance

5

Direct Labor rate variance

6

Direct Labor efficiency variance

7

The variable overhead spending variance

8

The variable overhead efficiency variance

9

The fixed overhead spending variance

Question 10:

If the fixed overhead is applied based on a rate of $2.00 per direct labor hour, then what is the budgeted fixed overhead base (also called the denominator) quantified in terms of finished packages?

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