Q1) Standards for one case of liquid weed killer are:
Direct materials
|
3 lbs. @ $6.00/lb
|
Direct labor
|
1.8hrs. @ $12.00/hr
|
Variable overhead (based on machine hours)
|
0.6hrs. @ $3.50/hr
|
In the week ended August 6, the following activity took place:
2390 machine hours were worked
11400 lbs. of raw material were purchased for inventory at a local cost $70680
3800 cases of finished product were produced
11290 lbs. of raw material were used
6720 labor hours were worked at an average rate of $12.25 per hour
$8126 actual variable overhead costs were incurred
Questions:
Compute each of the given variances and give plausible description for results:
i. Raw material purchase price variance:
ii. Raw material usage variance:
iii. Direct labor rate variance:
iv. Direct labor efficiency variance:
v. Variable overhead spending variance:
vi. Variable overhead efficiency variance:
Description of results.
vii. Create flexible budget based on production of 3800 cases. Remember to compute material spending budget based on purchases not production.