Assignment task: The following data pertains to the month of October for ElmCo. Elmco. budgeted to sell 5,000 units of product P90 at $53 per unit. Production of P90 was also scheduled to equal 5,000 units. The budgeted costs for each unit of P90 were:
Direct materials 3 lbs. at $7.00 per lb.
Direct labor 0.20 labor hours at $18.00 per hour
Machine hours 0.05 machine hours at $50 per hour (variable overhead)
Fixed Mfg OH $60,000 for the month.
Fixed overhead is applied to WIP on the basis of a pre-determined fixed overhead rate and actual direct labor hours used.
Actual production and sales of P90 in October was 4,600 units. Elmco. recorded the following costs:
Direct materials 15,100 lbs of material costing a total of $107,550.
Direct labor 1,012 hours costing a total of $16,951
Machine hours 235 machine hours with variable overhead costs totaling $12,435
Fixed Mfg OH $62,400 for the month
Determine the following amounts. It is helpful to also know whether each variance is favorable or unfavorable. Note that I am using the naming convention for these variances given in the text. If a variance calculation results in a negative value, be sure to enter your answer as a negative number
- Determine the Direct Materials Price Variance
- Determine the Direct Materials Quantity Variance
- Determine the Direct Labor Rate Variance
- Determine the Direct Labor Efficiency Variance
- Determine the Variable overhead Spending or Price Variance
- Determine the Variable overhead Efficiency Variance
- Determine the Fixed overhead Price Variance
- Determine the Fixed overhead Production Volume Variance.