Direct material variances: Direct material variances refer to the difference between the standard direct material cost and actual direct material cost incurred. Direct material cost variances are categorized into following two categories: Direct material Rate variance : this variance shows the difference of standard rate and actual rate of material. The formula to calculate this variance is as follows: Direct material rate variance = ( Actual rate – Standard rate ) × Actual Quantity Direct material usage variance: this variance shows the difference of standard usage and actual usage of material. The formula to calculate this variance is as follows: Direct material usage variance = ( Actual Quantity – Standard Quantity ) × Standard rate Direct material cost or spending variance: this variance shows the difference of standard cost and actual cost of material. The formula to calculate this variance is as follows: Direct material cost variance = Direct material rate variance + Direct material usage variance To calculate: Direct Material Price, Quantity, and Spending variances.

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Answer 1

Question

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

Chapter 9, Problem 5.1GBP

To determine

Concept introduction:

Direct material variances:

Direct material variances refer to the difference between the standard direct material cost and actual direct material cost incurred. Direct material cost variances are categorized into following two categories:

Direct material Rate variance: this variance shows the difference of standard rate and actual rate of material. The formula to calculate this variance is as follows:

Direct material rate variance = (Actual rate – Standard rate) ×Actual Quantity

Direct material usage variance: this variance shows the difference of standard usage and actual usage of material. The formula to calculate this variance is as follows:

Direct material usage variance = (Actual Quantity – Standard Quantity)×Standard rate

Direct material cost or spending variance: this variance shows the difference of standard cost and actual cost of material. The formula to calculate this variance is as follows:

Direct material cost variance = Direct material rate variance + Direct material usage variance

To calculate:

Direct Material Price, Quantity, and Spending variances.

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Ehrlich Inc. makes a product with the following standard costs for direct material and direct labor: Quantity/Hours Price /Rate Per Unit Direct Material 6.00 lbs $ 3.80 Direct Labor 1.5 hrs $ 16.00 During the most recent month, 6,300 units were produced. The costs associated with the month's production of this product were as follows: Quantity/Hours Price /Rate Materials purchased 42,000 lbs $3.00/per lbs. Materials used in production 32,000 lbs Direct labor 9,950 hrs $14.50/per hr.

Required: 1. For direct materials: a. Compute the actual cost per foot of materials for March. b. Compute the price variance and the spending variance. 2. For direct labor: a. Compute the standard direct labor rate per hour. b. Compute the standard hours allowed for the month’s production. c. Compute the standard hours allowed per unit of product.

Inputs Direct materials Direct labor Variable manufacturing overhead Actual output Raw materials purchased Actual cost of raw materials purchased Raw materials used in production Actual direct labor-hours Actual direct labor cost Actual variable overhead cost The company has reported the following actual results for the product for September: Standard Quantity or Hours per Unit of Output Required: a. Compute the materials price variance for Septer b. Compute the materials quantity variance for September. c. Compute the labor rate variance for September. a. Materials price variance b. Materials quantity variance Labor rate variance Labor efficiency variance variable overhead spending variance Variable overhead efficiency variance C. d. 9.40 liters 0.60 hours 0.60 hours 11,600 units 110,000 liters $1,010,500 $ $ e. f. d. Compute the labor efficiency variance for September. e. Compute the variable overhead spending variance for September. 109,070 liters 6,380 hours f. Compute the variable…

Answer 2

Question

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

Chapter 9, Problem 5.1GBP

To determine

Concept introduction:

Direct material variances:

Direct material variances refer to the difference between the standard direct material cost and actual direct material cost incurred. Direct material cost variances are categorized into following two categories:

Direct material Rate variance: this variance shows the difference of standard rate and actual rate of material. The formula to calculate this variance is as follows:

Direct material rate variance = (Actual rate – Standard rate) ×Actual Quantity

Direct material usage variance: this variance shows the difference of standard usage and actual usage of material. The formula to calculate this variance is as follows:

Direct material usage variance = (Actual Quantity – Standard Quantity)×Standard rate

Direct material cost or spending variance: this variance shows the difference of standard cost and actual cost of material. The formula to calculate this variance is as follows:

Direct material cost variance = Direct material rate variance + Direct material usage variance

To calculate:

Direct Material Price, Quantity, and Spending variances.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 3

Question

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

Chapter 9, Problem 5.1GBP

To determine

Concept introduction:

Direct material variances:

Direct material variances refer to the difference between the standard direct material cost and actual direct material cost incurred. Direct material cost variances are categorized into following two categories:

Direct material Rate variance: this variance shows the difference of standard rate and actual rate of material. The formula to calculate this variance is as follows:

Direct material rate variance = (Actual rate – Standard rate) ×Actual Quantity

Direct material usage variance: this variance shows the difference of standard usage and actual usage of material. The formula to calculate this variance is as follows:

Direct material usage variance = (Actual Quantity – Standard Quantity)×Standard rate

Direct material cost or spending variance: this variance shows the difference of standard cost and actual cost of material. The formula to calculate this variance is as follows:

Direct material cost variance = Direct material rate variance + Direct material usage variance

To calculate:

Direct Material Price, Quantity, and Spending variances.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

Chapter 9, Problem 5.1GBP

To determine