XYZ Corporation manufactures and sells electronic gadgets. The company uses a standard cost system to analyze its manufacturing costs. The standard cost of producing one gadget is as follows: Direct materials: 3 units @ $15 per unit Direct labor: 2 hours @ $20 per hour Variable overhead: $10 per gadget Fixed overhead: $5,000 per month During the month of June, the company produced 5,000 gadgets and incurred the following actual costs: Direct materials: 14,500 units purchased at $14.50 per unit Direct labor: 9,800 hours worked at an average rate of $21 per hour Variable overhead: $52,000 Fixed overhead: $5,200 Answer the following questions and show all calculations: a) Compute the direct materials price and efficiency variances. b) Compute the direct labor rate and efficiency variances. c) Compute the variable overhead spending and efficiency variances. d) Compute the fixed overhead budget and volume variances. e) Prepare a cost variance analysis table to summarize the results.
XYZ Corporation manufactures and sells electronic gadgets. The company uses a
Direct materials: 3 units @ $15 per unit
Direct labor: 2 hours @ $20 per hour
Variable
Fixed overhead: $5,000 per month
During the month of June, the company produced 5,000 gadgets and incurred the following actual costs:
Direct materials: 14,500 units purchased at $14.50 per unit
Direct labor: 9,800 hours worked at an average rate of $21 per hour
Variable overhead: $52,000
Fixed overhead: $5,200
Answer the following questions and show all calculations:
a) Compute the direct materials price and efficiency variances.
b) Compute the direct labor rate and efficiency variances.
c) Compute the variable overhead spending and efficiency variances.
d) Compute the fixed overhead budget and volume variances.
e) Prepare a cost variance analysis table to summarize the results.
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