Problem
Flex Budgeting and Variance Analysis
Glaab Inc. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours.
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Inputs
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Standard Quantity or Hours per Unit of Output
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Standard Price or Rate
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Direct materials
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8.6 kilos
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$6.00 per kilo
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Direct labor
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0.40 hours
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$11 per hour
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Variable manufacturing overhead
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0.40 hours
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$5 per hour
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The company has reported the following actual results for the product for August:
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Actual output
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8,400 Units
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Raw materials purchased and used
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76,900 kilos
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Actual cost of raw materials purchased
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$469,090
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Actual direct labor-hours
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3,320 Hours
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Actual direct labor cost
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$35,524
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Actual variable overhead cost
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$17,928
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Task
A. Compute and interpret the materials price variance for August.
B. Compute and interpret the materials quantity variance for August.
C. Compute and interpret the labor rate variance for August.
D. Compute and interpret the labor efficiency variance for August.
E. Compute and interpret the variable overhead rate variance for August.
F. Compute and interpret the variable overhead efficiency variance for August.