Problem
Variance Analysis - YaHo, Inc.; Background information for YaHo, Inc.
YaHo, Inc. has provided the following standards data concerning one of their products. Assume that all overhead costs are variable, and that variable overhead is applied to products based on direct labor (DL) hours. YaHo, Inc. planned to produce 4,650 units of this product in July.
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Inputs
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Standard quantity or standard hours of input per unit of output
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Standard price or rate per unit of input
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Direct materials
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5.2 liters
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$4.30 per liter
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Direct labor
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0.80 DL hours
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$14.00 per DL hour
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Variable overhead
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0.80 DL hours
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$2.75 per DL hour
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The following are the actual results for July:
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Actual output
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4,450 units
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Raw materials purchased and used
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23,585 liters
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Actual cost of raw materials purchased
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$94,800
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Actual direct labor hours used
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4,183 DLh
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Actual direct labor cost
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$50,196
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Actual variable overhead cost
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$11,020
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Question I: Calculate the direct materials efficiency variance for the month of July for YaHo, Inc.
Question II: Is the DM Efficiency Variance for YaHo, Inc. favorable or unfavorable?
Question III: Calculate the direct labor spending variance for the month of July for YaHo, Inc.
Question IV: Is the DL spending variance for YaHo, Inc. favorable or unfavorable?
Question V: Calculate the variable overhead activity variance for the month of July for YaHo, Inc.
Question VI: Is the Variable OH activity variance for YaHo, Inc. favorable or unfavorable?