Koontz Company manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May. Standard Cost per Unit Actual Cost per Unit Direct materials: Standard: 1.80 feet at $2.00 per foot Actual: 1.75 feet at $2.20 per foot Direct labor: Standard: 0.90 hours at $20.00 per hour Actual: 0.95 hours at $19.40 per hour Variable overhead: Standard: 0.90 hours at $6.40 per hour Actual: 0.95 hours at $6.00 per hour Total cost per unit Excess of actual cost over standard cost per unit $ 3.60 $ 3.85 18.00 18.43 5.76 5.70 $27.36 $27.98 $0.62 The production superintendent was pleased when he saw this report and commented: "This $0.62 excess cost is well within the 5 percent limit management has set for acceptable variances. It's obvious that there's not much to worry about with this product." Actual production for the month was 12,500 units. Variable overhead cost is assigned to products on the basis of direct labor-hours. There were no beginning or ending inventories of materials. Required: 1. Compute the following variances for May: a. Materials price and quantity variances. b. Labor rate and efficiency variances. c. Variable overhead rate and efficiency variances. 2. How much of the $0.62 excess unit cost is traceable to each of the variances computed in (1) above. 3. How much of the $0.62 excess unit cost is traceable to apparent inefficient use of labor time?
Koontz Company manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May. Standard Cost per Unit Actual Cost per Unit Direct materials: Standard: 1.80 feet at $2.00 per foot Actual: 1.75 feet at $2.20 per foot Direct labor: Standard: 0.90 hours at $20.00 per hour Actual: 0.95 hours at $19.40 per hour Variable overhead: Standard: 0.90 hours at $6.40 per hour Actual: 0.95 hours at $6.00 per hour Total cost per unit Excess of actual cost over standard cost per unit $ 3.60 $ 3.85 18.00 18.43 5.76 5.70 $27.36 $27.98 $0.62 The production superintendent was pleased when he saw this report and commented: "This $0.62 excess cost is well within the 5 percent limit management has set for acceptable variances. It's obvious that there's not much to worry about with this product." Actual production for the month was 12,500 units. Variable overhead cost is assigned to products on the basis of direct labor-hours. There were no beginning or ending inventories of materials. Required: 1. Compute the following variances for May: a. Materials price and quantity variances. b. Labor rate and efficiency variances. c. Variable overhead rate and efficiency variances. 2. How much of the $0.62 excess unit cost is traceable to each of the variances computed in (1) above. 3. How much of the $0.62 excess unit cost is traceable to apparent inefficient use of labor time?
Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
18th Edition
ISBN:9780079039897
Author:Carter
Publisher:Carter
Chapter10: Statistics
Section10.1: Measures Of Center
Problem 3BGP
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Transcribed Image Text:Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Required 3
How much of the $0.62 excess unit cost is traceable to each of the variances computed in (1), above. (Indicate the effect of
each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all
amounts as positive values. Round your answers to 2 decimal places.)
Materials:
Price variance
Quantity variance
0.00
Labor:
Rate variance
Efficiency variance
0.00
Variable overhead:
Rate variance
Efficiency variance
0.00
Excess of actual over standard cost per unit
0.00
Required 1
Required 3 >
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Transcribed Image Text:Koontz Company manufactures a number of products. The standards relating to one of these products are shown below, along with
actual cost data for May.
Standard
Cost per
Unit
Actual
Cost per
Unit
Direct materials:
Standard: 1.80 feet at $2.00 per foot
Actual: 1.75 feet at $2.20 per foot
Direct labor:
Standard: 0.90 hours at $20.00 per hour
Actual: 0.95 hours at $19.40 per hour
Variable overhead:
Standard: 0.90 hours at $6.40 per hour
Actual: 0.95 hours at $6.00 per hour
$ 3.60
$ 3.85
18.00
18.43
5.76
5.70
Total cost per unit
$27.36
$27.98
Excess of actual cost over standard cost per unit
$0.62
The production superintendent was pleased when he saw this report and commented: “This $0.62 excess cost is well within the 5
percent limit management has set for acceptable variances. It's obvious that there's not much to worry about with this product."
Actual production for the month was 12,500 units. Variable overhead cost is assigned to products on the basis of direct labor-hours.
There were no beginning or ending inventories of materials.
Required:
1. Compute the following variances for May:
a. Materials price and quantity variances.
b. Labor rate and efficiency variances.
c. Variable overhead rate and efficiency variances.
2. How much of the $0.62 excess unit cost is traceable to each of the variances computed in (1) above.
3. How much of the $0.62 excess unit cost is traceable to apparent inefficient use of labor time?
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