Question
Zee Corporation has developed the following cost standards for the production of its leather backpacks: Standard Cost Per BackpackLeather (2.1 yards $24 per yard)$50.40Direct labor
Zee Corporation has developed the following cost standards for the production of its leather backpacks:
Standard Cost Per BackpackLeather (2.1 yards $24 per yard)$50.40Direct labor (2.4 hours $9.00 per hour)$21.60Variable overhead (2.4 hours $15.20 per hour)$36.48
Variable overhead at Zee is applied on the basis of direct labor hours. The actual results for last month were as follows:
Number of backpacks produced13,000Direct labor hours incurred30,380Yards of leather purchased28,980Yards of leather used in production28,410Cost of leather purchased$646,254Direct labor cost$232,407Variable overhead cost$472,409
The direct materials purchases variance is computed when the materials are purchased.
Required:
Compute the following variances for Zee.
a. Materials price variance.
b. Materials quantity variance.
c. Labor efficiency variance.
d. Variable overhead rate variance.
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